Barnes & Noble Inc. Chief Executive William Lynch Monday said the company's deal with Microsoft Inc. to form a new subsidiary formed out of the retailer's digital-book business and college texts business will be "well capitalized" to pursue the digital book business.

Lynch made the comment in an interview with CNBC shortly after the two companies announced plans for the tie up.

Click here to find out more!Under terms of the deal, Microsoft is making a $300 million investment in the new unit, dubbed Newco, and will hold a 17.6% stake in the business, the companies said.