Barnes & Noble to keep Nook digital business after all

Barnes & Noble is keeping its Nook Media digital business after all.

The bookseller had planned to combine Nook and its college bookstores into a single company separate from its retail operations.

Barnes & Noble's retail operations, which include its bookstores and the BN.com business, have been outperforming Nook.

Barnes & Noble spent years investing heavily in its Nook e-book reader and e-book library, but they struggled to be profitable.

The biggest U.S. brick-and-mortar bookseller said Thursday that keeping Nook and the retail operations together would better serve digital customers. The separation is expected to be finished by August's end. Barnes & Noble Education, a separate, publicly traded company, will house the college business.

Shares of Barnes & Noble Inc. surged $1.73, or 7.1 percent, to $25.98 in morning trading.