(By Balachander) Barnes & Noble Inc. (NYSE: BKS) said UK-based Pearson Plc (NYSE: PSO) agreed to invest roughly $89.5 million of cash in its NOOK Media LLC unit.
In Friday early trading, BKS shares gained 3.41 percent to $14.84.
The investment is at a post-money valuation of about $1.789 billion in exchange for preferred membership interests representing a 5 equity stake in NOOK Media, Barnes said.
Barnes also said it expects its holiday sales results will be below expectations and that the NOOK business will not meet its prior projection for fiscal year 2013.
NOOK Media consists of Barnes & Noble's digital businesses including its NOOK e-reader and tablets, the NOOK digital bookstore and its 674 college bookstores across America.
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Following the completion of the deal, Barnes would own around 78.2 percent of the NOOK Media subsidiary and Microsoft will own about 16.8 percent.
Pearson, a media and education company, will earn the option to purchase up to an additional five percent ownership of NOOK Media under certain conditions.
The companies noted that Pearson's investment in NOOK Media will facilitate improved discovery of available digital content and services, as well as seamless access.
U.S.-listed shares of PSO ended at $19.37 on Thursday.