Best Buy to acquire music-sharer Napster

By ASHLEY M. HEHER

CHICAGO (AP) — Napster Inc., the online music community that rose from a dorm room project to became the scourge of the global recording industry, is being purchased by Best Buy Inc. for nearly $127 million as the electronics retailer tries to boost its digital music business.

The $2.65 per share all-cash deal announced Monday is nearly double the music network's Friday closing price but a small sum to pay for Best Buy, which gets access to Napster's 700,000 subscribers who pay a monthly fee to access digital music catalogs.

"It's not a huge investment, but it definitely has brand recognition," said Morningstar analyst Brady Lemos, who said Best Buy also benefits from the acquisition of technical expertise about the digital music industry.

In a statement, Best Buy valued the deal at $121 million, and said the difference was due to unvested employee stock awards at Napster. According to its most recently quarterly filing, Napster had about 47.9 million shares outstanding as of Aug. 8, implying a price of $126.9 million.

Napster, a once-free file-sharing network incorporated in 2000, was a favorite tool among cheap college students earlier in the decade. But as the service gained popularity, the company became the sworn enemy of heavy metal band Metallica and along the way fueled a cultural, legal and political debate about copyrights and intellectual property while at the same time helping popularize digital music.

"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," Napster Chairman and Chief Executive Chris Gorog said in a statement.

Best Buy to acquire music-sharer Napster....