Bertelsmann Books Internet Deal
Bertelsmann AG agreed Tuesday to pay $200 million for a 50 percent stake in Barnes & Noble's Barnesandnoble.com online subsidiary as the book giants join forces in hopes of giving Amazon.com a run for its money on the Internet.
The deal also means the planned initial public offering of Barnesandnoble.com will be "temporarily delayed," according to a statement released by the two companies.
On Sept. 24, Barnes & Noble (BKS) registered with the Securities and Exchange Commission to raise as much as $100 million for its online operation. Barnes & Noble was expected to retain at least an 80 percent stake in the firm, so the privately held German media behemoth Bertelsmann appears to have bought its stake in Barnesandnoble.com at a discount to the proposed IPO valuation."We are delighted to enter this exciting new phase of our e-commerce expansion with a partner of Bertelsmann's stature," said Leonard Riggio, chairman and chief executive officer of Barnes & Noble, in the statement. "Their extensive expertise in direct marketing and pre-eminent position as a media company will strengthen our capital structure, enhance the quality of our offering and, most profoundly, provide Barnesandnoble.com with immediate access to global markets."
Bertelsmann will continue to roll out its separate BooksOnline venture in several European countries this November. BooksOnline will work with Barnesandnoble.com to offer "U.S and worldwide customers of both ventures a unique, seamless experience of online shopping for a vast array of books in multiple languages," the statement said.
For the six months ended in August, Barnesandnoble.com generated $21.9 million in sales and boasted of 700,000 customers. Amazon.com (AMZN), by comparison, sold $203.4 million worth of books and related items and had more than 3.1 million customers.
Ahead of the news, shares of Barnes & Noble gained 3/16 to close at 23 9/16.
Written By Darren Chervitz, CBS MarketWatch