With companies struggling to cope with competition from Apple by themselves, Best Buy has acquired the trouble Napster for $121 million. This deal which is expected to be concluded in the fourth quarter requires Best Buy to pay 54 million taking into account $67 million from short term investments and cash transactions of Napster.
Napster was the forerunner of online music downloads offering a file sharing network which became very popular. However, it became difficult for Napster to survive as a vendor offering legal downloads. This company has been on the lookout to sell for some time now and recently appointed UBS to find a buyer.
SEC documents for the purchase was filed on Sunday by Netco which valued the company’s shares at $2.65 as against the closing Friday’s price of $1.36. Best Buy has acquired Napster’s customer service platform which is web based, its subscriber base numbering over 700,000 and its mobile capabilities.
According to the agreement, a $3million termination fee has to be paid by Napster if the deal falls through. Chris Allen, the COO, Chris Gorog, the CEO and Brand Duea have signed an agreement to work with Best Buy upto 3rd March 2012.
This transaction, which has been approved by the board of directors in Napster, will not result in relocation of premises or reshuffling of staff. Napster headquartered in Los Angeles with 140-employee strength will structurally operate as it is according to Best Buy.
