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Best Buy, a multinational retailer of technology and entertainment products/services has acquired Napster for $121 million. Being the pioneer of digital music, Napster has recently launched one of the world’s largest MP3 stores with a positive fiscal year closing with a revenue of $127.5 million.
The two companies are merging together under a definite agreement according to which Best Buy will pay Napster $2.65 per share in cash that makes the aggregate cost of $121 million. The deal will be a boon to Napster’s shareholders as they will be paid twice Fridays’s closing price by the company.
According to the proposed agreement, Best Buy will acquire Napster’s digital entertainment subscribers (more than 700,000), its innovative mobile capabilities and its web-based customer service platform. While Napster’s key members of senior management along with its CEO Chris Gorog will continue to apply their leadership capabilities at the company in a pre-acquisition circumstances.Best Buy considers Napster as one of the most eligible service that offers a wholesome collection of easy to use music. It allows users to subscribe and enjoy a continuous stream of music with an ability to purchase individual tracks, albums and mobile offers. Best Buy is planning to improve and enhance its service by integrating Napster’s user base and digital platform.Brian Dunn, President of Best Buy said:
This transaction offers Best Buy a recognized platform for enhancing our capabilities in the digital media space and building new, recurring relationships with customers, Over time we hope to strengthen our offerings to consumers, who we believe will increasingly seek devices and solutions that enable them to access their content wherever, whenever and however they want.
Dave Morrish, Executive Vice President - Connected Digital Solutions of Best Buy, added:
We believe Napster brings us excellent capabilities in the mobility space, as well as international operations and an established team of technology experts. We can foresee Napster acting as a platform for accelerating our growth in the emerging industry of digital entertainment, beyond music subscriptions. We’re very excited to add these capabilities to leverage our existing relationships with the labels, the studios, and the hardware providers. We believe Napster will be an outstanding addition to our already robust portfolio of partners and offerings in the digital music space.
Napster seems quiet happy with its acquisition and think that it would be beneficial for the company, its shareholders, partners and employees. Chris Gorog, chairman and CEO of Napster said:
We believe Best Buy will be an ideal partner for Napster and are very excited by the benefits that this transaction delivers to our shareholders, partners and employees. Best Buy is uniquely positioned to benefit from Napster’s digital entertainment distribution platform. We are looking forward to combining our digital media capabilities with Best Buy’s resources and global network to extend our digital content platforms.
Best Buy in 2000, had already acquired the Musicland/Sam Goody stores for $700 million.
