Barnes & Noble Inc will develop a tablet with Samsung Electronics Co Ltd as it tries to revive its money-losing Nook digital business.
The tablets will combine Samsung's hardware with Nook's software, allowing Barnes & Noble to focus on providing digital reading technology and content without spending on developing hardware.
Barnes & Noble said last year that it would stop producing Nook tablets until it found a partner, after losing hundreds of millions of dollars trying to compete with Amazon.com Inc, Apple Inc and Google Inc.
"The deal signals that Barnes & Noble is repositioning Nook as a content-centric, rather than device-centric, business," Maxim Group analysts wrote in a note.
Nook was originally launched as an e-reader along the lines of Amazon's Kindle, but failed to take off.
A 7-inch version of the Samsung Galaxy Tab 4 Nook tablet is slated for a U.S. launch in early August. The devices will be sold at Barnes & Noble's nearly 700 stores and on its website, bn.com.
"(This deal) is as good as it gets for Barnes & Noble," Janney Capital Markets analyst David Strasser wrote in a note.
The deal will drive cutting-edge design and help the bookseller slash losses at its Nook division, while drastically reducing manufacturing expenses over the next two years and adding to revenue growth, he said.
The agreement offers access to Barnes & Noble's digital collection of more than 3 million books, magazines and newspapers, the companies said in a statement.
"A partnership with Samsung raises the question, is Samsung interested in making further investments in Barnes & Noble as they look to expand their retail footprint in an effort to compete with Apple," Maxim Group analysts said.
They added that a store-in-store strategy between the companies was a possibility, similar to the arrangement Samsung has with Best Buy Co Inc.
Barnes & Noble has agreed to buy 1 million tablets in the first year after launch. This period will be extended to 15 months if the devices do not meet sales targets, the company said in a filing. (link.reuters.com/tan89v)
The company said on Thursday that it would continue to offer its Nook GlowLight e-book reader, launched in October.
Barnes & Noble shares rose as much as 4 percent to $19.67 on the New York Stock Exchange on Thursday.
(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Kirti Pandey and Simon Jennings)