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Amazon.com Inc. (AMZN - Analyst Report) announced that it has acquired Avalon Books, a 62-year-old publishing company for an undisclosed amount. The acquisition will add over 3,000 titles to Amazon’s already large stock of books. The terms of the transaction were not revealed.

Amazon Publishing, the publishing arm of Amazon.com, will publish the Avalon books under its West Coast imprints, including Montlake Romance and Thomas & Mercer. This Avalon buyout will further expand its titles in the romance, mystery and Western genres.

The books will be available in print for bookstores and libraries. While the Avalon books have not yet been digitized, Amazon intends to add the titles to its Kindle e-reader platform over time.

The acquisition will further extend Amazon’s foothold in the publishing world. The company launched its first imprint in 2009, and now runs eight separate publishing lines.

With the recent boom in technology and the popularity of ebooks, Amazon needs to put in its best to have a successful publishing business with high quality books in its list.

Over the past year, Amazon has been taking every possible step to expand its catalog and remains one of the favorite players for book lovers in the fast-growing ecommerce market.

In April, Amazon bought the rights to publish 14 James Bond books in the United States. Last December, the company bought 450 kid-friendly titles from Marshall Cavendish Children's Books. Hence, by expanding its own digital publishing arm, the company will be able to protect losses in its physical book business and position itself much better for the future.

The book business is changing rapidly due to the increased customer adoption of Kindles, iPads and other devices that are making e-books more attractive than hardcovers. Amazon with its Kindle Fire has strongly penetrated the market, and has now more than 60% market share in e-readers due to its attractive pricing.

WitsView, a research division of TrendForce, expects e-reader shipments to reach 12.3 million units in 2012 from 7.4 million units in 2011. According to Gartner, e-reader sales are expected to peak in 2013 with sales of 28 million units.

In the first quarter 2012 earnings announcement made on April 25, Amazon’s revenue was $13.19 billion, which was at the high end of the guidance range for the quarter and ahead of Consensus expectations by around 2.2%. Management attributed the increase in revenue to the growing consumption of digital content across different categories because of the advantageous value proposition Amazon was able to provide to its customers.

However, competition from eBay Inc. (EBAY - Analyst Report), Apple Inc. (AAPL - Analyst Report) through its iBooks app, Barnes & Noble, Inc. (BKS - Snapshot Report) and Google Inc. remains strong.

Currently, Amazon has a Zacks #3 Rank, which implies a Hold rating in the near term.

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