Best Buy to purchase Napster for $121M US
U.S. consumer electronics retailer Best Buy Co. Inc. said Monday it has agreed to buy online digital music retailer Napster Inc. for $121 million US.
The deal, set to close in the fourth quarter, values Napster at $2.65 a share, nearly double its Friday closing price of $1.36. The acquisition will include Napster's 700,000 subscribers and its web-based custom-service platform and mobile capabilities, Best Buy said.
"Best Buy intends to use Napster's capabilities and digital subscriber base to reach new customers with an enhanced experience for exploring and selecting music and other digital entertainment products over an increasing array of devices," Best Buy president Brian Dunn said.
The acquisition would allow Richfield, Minn.-based Best Buy to compete with web retailers like Amazon.com Inc. and Apple Inc. in the online music market.
It also adds to the electronics retailer's expansion into wireless services and products. In June, Best Buy paid $2.1 billion US to join a joint venture with U.K.-based Carphone Warehouse Group Plc.
Earlier this year, Los Angeles-based Napster began selling songs in the unrestricted mp3 format in the hopes of competing with Amazon and Apple.
Napster first gained notoriety in 1999 as a haven for file sharing, but U.S. courts shut it down in 2002 over copyright issues. In 2003, the company reopened as a legitimate distributor of online music and now boasts a catalogue of more than six million tracks.
Napster head Chris Gorog said the company's senior executives will remain at their jobs, and the company will remain at its L.A. headquarters.
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