Looks like Chris Gorog really was serious about selling off perenially troubled Napster (NAPS), after all. He’s selling the company to Best Buy (BBY) for $121 million. That’s $2.65 per share, which works out to be $54 million net of cash.
The good news for Napster shareholders is that Best Buy is paying twice Friday’s closing price. The bad news, for anyone who’s held the stock for any length of time: A year ago NAPS was trading above $3.
Best Buy says it will keep all of Napster’s LA-based staff, including CEO Gorog, on board. (Gorog has a 6.24% stake in his company, which includes options for 1.7 million shares and about 1 million unvested restricted stock units; all of those shares should vest when the deal closes.) In theory, this means that the landscape for digital music subscription services doesn’t actually change that much: There’s Napster, RealNetworks/MTV’s Rhapsody, and Microsoft’s Zune pass offering, and none of them have made much impact despite years of effort and millions of dollars burned.
This is the definition of a tuck-in for Best Buy, which sports an $18 billion market cap. Which is good, since the deal reminds us a tiny bit of Best Buy’s last foray into the music business: Its $700 million purchase of Musicland/Sam Goody stores in 2000, timed just as the music retail business began an 8-year-slide. Best Buy later gave away the retail chain for 10 empty jewel cases and a couple Vanilla Ice CDs.
See Also: Napster Half-Heartedly For Sale, Yet Again
Napster Shareholders Plan To Save The Company: Put Themsleves On The Board
DRM-Free Store? Who Cares. Napster Still Screwed
Napster: Needs A News Business Model
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