Best Buy acquires Napster, what?
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Best Buy, the consumer technology retailer, has purchased Napster, a pioneer in digital music entertainment. Napster agreed to be acquired at $2.65 per share in cash for a purchase price of approximately $121 million.
This is good for Napster but where does it fit in within Best Buy? Maybe Best Buy can offer Napster music solutions as trial options on PC’s, Laptop’s, MP3 players and cell phones sold through their stores. However, it does not seem to add a whole lot of value to the company. Will laptops, PC’s, MP3 players and mobile phones suddenly become more attractive to buyers because of Napster? We don’t think so. It will be interesting to see what Best Buy does with this acquisition.
“This transaction offers Best Buy a recognized platform for enhancing our capabilities in the digital media space and building new, recurring relationships with customers,” said Brian Dunn, President and COO of Best Buy. “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 has approximately 140 employees, with its headquarters in Los Angeles and has approximately 700,000 subscribers using it’s music download service on PC’s and mobile devices. The company had recently launched one of the world’s largest MP3 stores and had fiscal 2008 revenue of $127.5 million, an increase of 15 percent over the prior fiscal year; a loss of $16.5 million, an improvement compared with a loss of $36.8 million the prior fiscal year; and positive cash flow for the fiscal year ended March 31, 2008.
