By Lisa Kerner
Charlotte, N.C., Sept, 15 - Best Buy Co., Inc. will begin a $2.65-per-share cash tender offer for Napster Inc. after the companies agreed to combine in a deal valued at about $121 million.
According to Best Buy, the proposed acquisition includes Napster's approximately 700,000 digital entertainment subscribers, web-based customer service platform and mobile capabilities.
Napster's board of directors approved the transaction, which is expected to close during the fourth quarter of 2008, a Best Buy news release said.
A $3 million termination fee is included in the agreement, it was reported in a form 8-K filed with the Securities and Exchange Commission.
Napster chief executive officer Chris Gorog and other key senior management members agreed to continue their leadership positions post-acquisition, Best Buy said.
Gorog called Best Buy an "ideal partner" for Napster, an online music distributor.
Best Buy does not plan to move Napster's Los Angeles headquarters location or make significant personnel changes.
"This transaction offers Best Buy a recognized platform for enhancing our capabilities in the digital media space and building new, recurring relationships with customers," Best Buy president and chief operating officer Brian Dunn said in the release.
"We can foresee Napster acting as a platform for accelerating our growth in the emerging industry of digital entertainment, beyond music subscriptions," added Dave Morrish, Best Buy executive vice president, connected digital solutions.
In a separate news release, Napster said it postponed its annual meeting of stockholders in connection with the merger agreement. The meeting had been scheduled for Thursday.
Best Buy, a Richfield, Minn., specialty retailer of consumer electronics and entertainment software, plans to fund the acquisition using available cash.
| Acquirer: | Best Buy Co., Inc.
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| Target: | Napster Inc.
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| Announcement date: | Sept. 15
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| Transaction total: | $121 million
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| Price per share: | $2.65
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| Termination fee: | $3 million
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| Expected closing: | Fourth quarter of 2008
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| Stock price for target: | Nasdaq: NAPS: $1.36 on Sept. 12
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