Microsoft (NASDAQ:MSFT) gave shares of Barnes & Noble (NYSE:BKS) a much-needed lift on Thursday, after news surfaced that the tech giant could buy the bookstore chain's Nook business. Shares of Barnes & Noble climbed 23% on the news. According to TechCrunch, Microsoft could pay as much as $1 billion to acquire the division of Barnes & Noble responsible for making e-readers and tablet devices.
TechCrunch speculates that a potential deal would not include Nook Media's college bookstore chain. Allegedly, Nook Media also plans to drop Android-based tables from its selection by the end of fiscal 2014, and migrate the Nook store onto Windows 8 and other third-party platforms.
What does this mean for Barnes & Noble?
This is great news for current Barnes & Noble shareholders. Nook Media's revenue for the recent quarter dipped 26%, which left shareholders questioning the future of the business. However, a possible Microsoft buyout could mean big things for the stock. According to David Strasser of Janney Capital Markets, "If the rumor proves to be true, Barnes & Noble is worth between $25 and $35 a share."
Barnes & Noble stock was trading around $20 a share at the time of this writing. A possible acquisition also makes sense for Microsoft, which currently holds a 17% stake in Nook Media. However, it remains to be seen how a possible buyout would affect Barnes & Noble's retail business. Investors should stay tuned for more details as the story develops.
Fool contributor Tamara Rutter has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.