Barnes & Noble Inc. jumped the most in more than a year following a report that Microsoft Corp. is planning to offer $1 billion to buy the Nook Media unit.

The shares surged 21 percent to $21.50 at 10:21 a.m. in New York, after earlier rising 28 percent for the largest intraday gain since April 30, 2012. Microsoft fell 1.1 percent to $32.63.

The plan sees Microsoft gaining preferred units in Nook Media, which also includes a college book business, Techcrunch reported yesterday, citing internal documents. Nook Media also intends to discontinue its Android-based tablet business by the end of its 2014 fiscal year to begin using applications on unnamed “third-party” devices, Techcrunch said.

Mary Ellen Keating, a spokeswoman for New York-based Barnes & Noble, declined to comment on the report in an e-mail. Representatives for Redmond, Washington-based Microsoft couldn’t immediately be reached for comment outside of regular business hours.

In April 2012, Microsoft announced a $300 million investment in the newly formed Nook Media subsidiary. Microsoft’s 18 percent stake valued Nook Media at $1.7 billion. Publisher Pearson Plc then announced an investment of $89.5 million in December in the unit, which gave Nook Media a valuation of $1.79 billion.

Nook Media had an operating loss of $190.9 million and sales of $2.18 billion in the three quarters through Jan. 26. The division has been unprofitable as it spends on marketing and developing devices to compete in the tablet market with Apple Inc., Inc. and Google Inc.

Should Microsoft end up owning Nook Media, it would be the software company's most notable deal since it purchased Skype Global for $8.5 billion in May 2011.

For more coverage on Skype, see "Private Equity Perspective: Will Silver Lake and its New Fund Save Dell"

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