Barnes & Noble has unveiled plans to raise up to $775 million in a spinoff of the company’s college bookstore assets in a move that will create a separate, publicly traded company.
The plan will separate Barnes & Noble Education from the legacy Barnes & Noble (BKS) retail and Nook digital businesses. Barnes & Noble last summer had disclosed plans to spin off the Nook Media business, though that business will still be owned by the parent company after the college business spin off. Barnes & Noble has faced challenges in both the physical and digital worlds: Amazon.com (AMZN) and other Internet sellers have made significant inroads selling books, and the B&N’s Nook devices, while well received when they first debuted, have fallen out of favor as consumers bought more iPads and Kindles.
The separation, Barnes & Noble said, is intended to be a tax-free distribution to current Barnes & Noble shareholders and is expected to be completed by the end of August.
As of November 1, Barnes & Noble operated 714 stores nationwide on college and university campuses, reaching 23% of the total U.S. college student enrollment population. Total sales for fiscal 2014 were $1.75 billion, while same-store sales for the business slipped 2.7%. Net earnings for the latest year totaled $35.1 million, up from $30.2 million the prior year.
“We have a talented College management team in place, led by CEO Max Roberts, and we will continue to invest and innovate to support the mission of our campus partners, expanding to new colleges and universities, students and faculty and increasing our presence in the growing market for digital educational content and services,” said Michael P. Huseby, Barnes & Noble CEO.
The separation is intended to allow investors to assess each business more clearly as a stand-alone company.