Barnes & Noble has announced its plans to spin-off its Nook division. The beleaguered book seller justified its move claiming better optimization of investor wealth along with enhanced long-term business opportunity for both the entities after separation.
According to Pcmag, the entire separation process will be time-consuming and not expected to come into effect before Q1 2015. This was not the first time the U.S. book retailer is contemplating a segregation of its business.
Something of this sort was also proposed by Former CEO William Lynch but obviously didn't materialize. Currently, after having won the board's approval, B&N is pushing ahead with the process. A fall out of the move will be that B&N will cease to be in direct competition with Amazon or its Kindle series of devices.
B&N, in the recent past, tied up with Samsung for the joint launch of a tablet named Samsung Galaxy Tab 4 Nook. As per the deal, Samsung will be supplying the tablet hardware, which in turn would run B&N software. The tablet is expected to launch in the U.S. by August. This marks the end for the company investing in designing its own tablets in house.
Earlier in 2012, Microsoft had invested $300 million in the retailers' Nook division for a 17.6 percent stake.
The Nook division, which comprises of the Nook line of tablets, accessories and ebooks, has accrued a net loss of $56 million for the fourth fiscal quarter with revenue dropping 22.2 percent during the period. As a whole, B&N reported a loss of $36.7 million even though revenues rose 3.5 percent to $1.3 billion.
B&N said it has witnessed strong sales in retail stores and college division.
Cravath, Swaine & Moore has been appointed as the legal counsel overlooking the separation while Guggenheim Securities will act as financial advisers.