Barnes & Noble shares jumped more than 90 percent in pre-market trading Monday on news that Microsoft will invest $300 million to further develop the bookseller's e-reader.
In return for giving Barnes & Noble's Nook division additional capital, Microsoft will receive a 17.6 percent stake.
The new subsidiary, which has yet to be named, will bring together the digital and college businesses of Barnes & Noble and separate them from the company's slow-growing book division.
Shares of Barnes & Noble shot up to $26.10, nearly double the $13.62 they had closed out at on Friday.
For Microsoft, the deal gives the company a position in the fiercely competitive world of e-readers where rivals Apple and Amazon hold sway with their iPads and Kindles.
For its part, Barnes & Noble gets the financial heft it needs to continue to develop the Nook.
“The formation of [the subsidiary] and our relationship with Microsoft are important parts of our strategy to capitalize on the rapid growth of the Nook business, and to solidify our position as a leader in the exploding market for digital content in the consumer and education segments,” William Lynch, CEO of Barnes & Noble, said in a statement.