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B&N to Split Off College Stores, Retain Nook and Retail Stores

Barnes & Noble announced today that they were splitting the 700 plus college stores operated by B&N into its own wholly owned company called B&N Education.

For the past 3 years Barnes & Noble’s college store division has been bundled into its digital division, Nook Media. As Nook Media’s fortunes waned, it’s been clear that B&N was going to have to split off the still financially healthy college stores from the toxic digital unit.


And today B&N finally acted.

According to the press release and SEC filing, B&N plans to split the college stores from the rest of the company, turn it into its own company, and then distribute the stock in the new company to B&N stockholders. The split will be complete by August 2015.

That’s a rather curious move on the part of B&N. The retailer had previous announced plans to split Nook Media off into a wholly owned company, but now the digital unit is going to remain part of B&N.

Clearly that plan was derailed by the quarter after quarter of declining digital revenues, resulting in a company which no one would want to invest in, so B&N is instead going to split off the relatively healthy college stores.

B&N Education is going to include the stores as well as Yuzu, the digital textbook platform which B&N launched last year. Given that students are reporting that Yuzu is utterly useless, I’m not sure what value it adds, and it would seem B&N doesn’t think it’s ready for prime time either.

B&N mentions in the prospectus that they plan to "pursue growth opportunities more broadly in the education sector, including by enhancing and expanding our digital assets. Achieving these goals will likely require acquisitions or mergers funded, in part, with capital raises and strategic alliances with other companies."

The new B&N Education is estimated to be worth $775 million. That’s far less that the billion and a half value hung on Nook Media when it was announced 3 years ago, but it is still more than the $436 million which B&n spent to buy the college stores unit from B&N founder Len Riggio in 2009.

Publishers Lunch

image by Brad Clinesmith

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Paul February 26, 2015 um 11:47 am

I suspect we’ll find there’s a tax dodge behind it somewhere which makes it a useful spin off.

DaveMich February 26, 2015 um 12:00 pm

Nook is on life support, and if you took away B&N’s name from it it would flatline almost instantly.

Paul February 26, 2015 um 12:02 pm

You need to change that to "if you took away the from it, Nook would flatline almost instantly"

That’s the key point. I still use quite a bit, and its only when amazon is dramatically cheaper than the nook that I buy from amazon instead.

fjtorres February 26, 2015 um 1:41 pm

Flippity flop, flippity flop…
And the soap opera continues, as the nook turns…

Nate Hoffelder February 26, 2015 um 1:52 pm

The Nook doesn’t turn so much as it circles (the drain).

fjtorres February 26, 2015 um 1:55 pm

Odds they flip flop yet again by August?

Nate Hoffelder February 26, 2015 um 2:04 pm

Oh, they’ll flipflop at least once in the next 6 months. The only question I have is whether they’ll do it twice.

I’m expecting the next twist to somehow benefit Riggio at the expense of B&N.

fjtorres February 26, 2015 um 4:02 pm

Two new strategies in 6 months?
That’s a lot even for them… but doable…
Maybe if they find a suc… er, a savior… willing to take on nook at a nominal price…?

Maria (BearMountainBooks) February 26, 2015 um 2:16 pm

They’d have sold nook if they could. They waited too long.

fjtorres February 26, 2015 um 3:47 pm

They needed to spin it out and IPO right after the deal with MS.

Doug February 27, 2015 um 1:15 pm

What’s really worth buying in the NOOK business? An inexpensive E-Ink e-reader product? A tablet co-branding arrangement with Samsung? An e-book store?

There’s nothing left. B&N discarded virtually everything it had that was unique, and all that’s left is generic stuff that anyone can do about as easily as buying.

Nate Hoffelder February 27, 2015 um 1:26 pm

What’s worth buying?

Around $100 million in tech in the platform. And that could be a generous estimate.

fjtorres February 27, 2015 um 7:17 pm

The eReader DRM tech is probably worth buying.
The 8% market share, maybe yes, maybe no, depending on whether the customers are strict B&N loyalists.
The Nook indie pub infrastructure and accounts.
The trad pub account managers.

Might be worth it as an acquihire move for the non-tech personnel still around. But the longer the bleeding goes on…

fjtorres February 27, 2015 um 7:18 pm

Oh, yes, the Fictionwise name might be worth buying. 🙂

Tom Semple February 27, 2015 um 6:45 pm

Just a few months ago, the Nook 'careers' page had dozens of job listings. I checked yesterday: zero.

Tom Semple February 27, 2015 um 7:04 pm

Of course, as long as Nook doesn’t lose money, they’re doing okay keeping the lights on, however dimly they burn. That got a little easier now that they don’t allow people to download ePub files (except for a couple of loopholes which are probably not worth the effort to close): no fees for Adobe DRM.

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