British education and media publisher Pearson Plc (PSON.L) has agreed to acquire a 5 percent stake in Barnes & Noble Inc's (BKS.N) Nook Media unit for $89.5 million, sending shares of the bookstore operator up as much as 9.7 percent on Friday.
The Nook Media unit comprises Barnes & Noble's digital businesses — including the Nook e-reader and tablets and the Nook digital bookstore — and 674 college bookstores across the United States.
Pearson is the owner of the Financial Times newspaper and the Penguin Group publishing house.
The latest investment in Nook comes after Microsoft Corp (MSFT.O) agreed in April to invest $300 million in Barnes & Noble's digital and college businesses, a move that sent Barnes & Noble's shares up 79 percent at the time. Barnes & Noble and Microsoft completed that partnership in October.
After the Pearson deal, Barnes & Noble will own about 78.2 percent of Nook Media and Microsoft will own around 16.8 percent, the companies said.
"We always believed that Microsoft was as interested in Barnes & Noble's opportunity in education as it was in the digital consumer arena," said David Strasser, analyst with Janney Montgomery Scott.
"But after this investment from Pearson, it is more clear that Nook Media has its sight set on transforming the way education is administered in the US and around the world," he wrote in a note to clients.
Nook has been a revenue-driver since its launch in 2009 as readers buy more digital books, but product development and marketing costs to keep the devices competitive with Amazon Inc's (AMZN.O) Kindle have made it an expensive project.
Barnes & Noble said in November that the quarterly loss at the Nook division increased on higher spending on its e-readers and tablets to keep pace with larger rivals Amazon and Apple Inc (AAPL.O).
Meanwhile, the top U.S. bookstore chain also said on Friday that sales in the crucial holiday season will come in below expectations, based on preliminary results and current sales trends.
Barnes & Noble said it would provide more details on its holiday sales on January 3. In November, it said that Nook device sales over the four-day Thanksgiving weekend - one of the busiest times of the year for U.S. retailers - doubled from last year, helped by promotions by Wal-Mart Stores Inc (WMT.N) and Target Corp (TGT.N).
The 2012 holiday season may have been the worst for retailers since the 2008 financial crisis, with sales growth far below expectations, according to some early findings.
Shares of Barnes & Noble were up 6.1 percent at $15.23 on the New York Stock Exchange on Friday afternoon, off an earlier high at $15.74. They were the fourth-largest gainer in percentage terms on the NYSE.
Pearson shares ended 0.3 percent lower at 1,193 pence in London.
(Reporting by Nivedita Bhattacharjee and Jessica Wohl in Chicago and Abhishek Takle in Bangalore; editing by Joyjeet Das and Matthew Lewis)