Barnes & Noble filed paperwork on Thursday to spin off its college-oriented retail division, Barnes & Noble Education, as a publicly traded company.
The decision is a surprise, as Barnes & Noble previously said its struggling Nook division would be the focus of a spin off. In December, the company ended its commercial agreement with Microsoft, which was viewed as the most likely buyer for the Nook business. News of the spin off sent the bookstore’s shares to a new 52-week high on Thursday morning, Forbes reported.
The company said the separation is designed to be a tax-free distribution to Barnes & Noble shareholders, and Barnes & Noble Education will likely spin off from the retail and Nook businesses by late August.
Barnes & Noble plans to raise up to $775 million through the initial public oferin.
[quote text_size=”small” author=”– Barnes & Noble”]
Separating Barnes & Noble Education will create an industry-leading, pure-play public company with more flexibility to pursue strategic opportunities in the growing educational services markets.
Barnes & Noble acquired the college segment of its business from Leonard Riggio in 2009. It now operates 714 stores on college campuses throughout the country, reaching about 23% of all college students in the U.S. The segment recorded $1.75 billion in sales in the 2014 fiscal year. The education division is the best-performing at the bookstore giant, recording $10.7 billion profit in the 26 weeks ending on November 21 and $977.4 million in sales.
By contrast, the core retail division reported $1.8 billion in sales, with the Nook unit accounting for just $133.9 million during that time period. The college textbook segment was the only division to report revenue growth, according to the New York Times.
Students spent an average of $313 on required textbooks for the fall 2014 semester, the National Association of College Stores. The association found new books have an average price of $72, compared to an average $54 for used textbooks, MarketWatch reported.