Best Buy announced it will purchase digital music retailer Napster for $121 million. The acquisition bolsters Best Buy’s chances at competing against Web music giants Amazon and Apple’s iTunes. Napster has close to 700,000 subscribers.
Digital Journal — In a move destined to shake up the online music industry, Best Buy is planning to snag Napster for $121 million US. The deal includes Napster’s 700,000 subscribers and its custom-service platform and capabilities, Best Buy said.
The acquisition also values Napster at $2.65 a share, nearly double its share price of $1.36 on Friday.
Brian Dunn, President and COO of Best Buy, said in a statement: “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.”
Napster will remain at its L.A. headquarters, and senior executives are expected to stay with the company.
Best Buy is looking to compete with other online music retailers by purchasing Napster. Earlier this year, Napster opened an online store that sold songs in the unrestricted MP3 format. The tracks can be played on practically any MP3 player.
Napster had fiscal 2008 revenue of $127.5 million, an increase of 15 per cent over the prior fiscal year, according to Best Buy’s news release.
