Barnes & Noble no longer needs to fear the exorbitant resources of Silicon Valley behemoths Amazon and Apple: Today, Barnes & Noble announced today it will be forming a strategic partnership with Microsoft by creating a new subsidiary, which has not been named yet, that will aim to accelerate the transition to digital publishing and significantly boost e-book sales.

Microsoft has invested $300 million into the new subsidiary, which puts the new company's post-money valuation at $1.7 billion. Microsoft's investment will give it approximately 17.6 percent equity stake. The new subsidiary will bring together all of Barnes & Noble's existing Nook businesses and its existing educational College business division.

The valuation of the new company is remarkably higher than Barnes & Noble itself, which currently has a market cap of $1.34 billion. Microsoft, on the other hand, has a market valuation of $268.95 billion.

The two companies appear to have put former legal complications behind them. Barnes & Noble and Microsoft have settled their patent litigation, and moving forward, Barnes & Noble and Newco will have a royalty-bearing license under Microsoft's patents for its NOOK eReader and Tablet products, said Microsoft in a written statement. This paves the way for both companies to collaborate and reach a broader set of customers.

The most immediate benefit for consumers will be the inclusion of a Nook application that will run on Windows 8 says today's press release. The partnership has been interpreted as a way for Microsoft to get more content onto its platform -- Windows 8 -- especially e-books, which are easily available on both Android tablets such as the Amazon Kindle Fire and Apple iOS tablets such as the Apple iPad.