Shares in Web audio content provider
jumped in early trading Monday on news the company has inked a promotional pact with
Under the terms of the deal, Amazon will snag a 5% stake in Audible and feature Audible services on the Amazon site over the next three years in exchange for $30 million.
Audible shares rose 10%, or 1 1/2, to 15 7/8. Amazon shares fell 1 5/8, or 3%, to 60 1/16. (Amazon closed up 2 7/8, or 4.7%, to 64 9/16; Audible closed up 1 1/16, or 7.4%, at 15 1/2.)
Amazon said the deal gives the e-tailing giant access to Audible's 20,000 hours of digital audio content. Wayne, N.J-based Audible offers content from everything from
The Wall Street Journal
The New York Times
to "audiobooks" by
The agreement is expected to close later this quarter.
Amazon.com joins a group of investors in Audible that includes
as well as venture capital firms
Patricof & Co.
Kleiner Perkins Caufield & Byers
The pact is a boon for both companies, said Nitsan Hargil, analyst with
"Audible's page is increasing its visibility tremendously, and Amazon buys 5% of Audible at market value while locking out competitors like
in this space."
Amazon bought its stake at Friday's market closing price, $15, Hargil said.
Audible has exclusive deals with most of its content providers, which makes it very difficult for potential competitors to make any headway, he noted. Hargil rates Audible a buy with a $25 price target, though he may revise that number on Monday's news. His firm has not done any underwriting for either company.