Audible Jumps After Amazon.com Deal

Amazon will snag a 5% stake in Audible and feature Audible services on its site in exchange for $30 million.

Author:: Justin Dini
Publish date:: Jan 31, 2000 10:04 AM EST

Amazon will snag a 5% stake in Audible and feature Audible services on its site in exchange for $30 million.

Shares in Web audio content provider

Audible

(ADBL)

jumped in early trading Monday on news the company has inked a promotional pact with

Amazon.com

(AMZN) - Get Report

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

and

The New York Times

to "audiobooks" by

Stephen King

and

William Shakespeare

The agreement is expected to close later this quarter.

Amazon.com joins a group of investors in Audible that includes

Microsoft

(MSFT) - Get Report

as well as venture capital firms

Patricof & Co.

and

Kleiner Perkins Caufield & Byers

The pact is a boon for both companies, said Nitsan Hargil, analyst with

Kaufman Bros.

"Audible's page is increasing its visibility tremendously, and Amazon buys 5% of Audible at market value while locking out competitors like

Barnesandnoble.com

(BNBN)

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.