Struggling book retailer Barnes & Noble (NYSE:BKS) saw its shares almost double in Monday pre-market trading, soaring as much as 93% to $26.50 a share, after announcing that Microsoft (NASDAQ:MSFT) would invest $300 million in a new, as yet unnamed, subsidiary.

In exchange for the cash, Microsoft will get an 18% stake in the $1.7 billion subsidiary, which will combine college textbook sales with Barnes & Noble’s popular Nook e-book and tablet businesses. In January, Barnes & Noble announced plans to separate its digital unit from its traditional book business.

Prior to today’s announcement, Barnes & Noble shares had been down 5.5% for the year. Nook revenues for the company’s fiscal third quarter jumped by 38%, dramatically outpacing sales at the bookseller’s bricks-and-mortar stores, which rose only 2% during the same time.

Under terms of the agreement, Microsoft will develop a Nook-based e-book app for Windows 8, the latest version of its flagship operating system to be released later this year, along with an expected slew of Window 8-based tablets.

Investing in Nook gives Microsoft a beachhead in the e-book market. Bloomberg noted that Amazon (NASDAQ:AMZN) currently holds about 60% of that market with its Kindle app, while Barnes & Noble has roughly 30%. By adding an e-book app, Microsoft also bolsters the capability of Windows 8 tablets, aimed to take on Apple‘s (NASDAQ:AAPL) iPad.

Prior patent litigation with Microsoft has been settled, Barnes & Noble said. The new subsidiaries will hold a royalty-bearing license for Microsoft patents relating to the Nook tablet and eReader app.