Best Buy Acquires Napster For $121 Million
Best Buy has acquired Napster for $121 million in cash. The announcement provides Best Buy with a digital music store, and is part of their online expansion strategy. How they will leverage the digital retail component with their physical stores remains to be seen, but the two working in concert may provide additional revenue potential.
“We can foresee Napster acting as a platform for accelerating our growth in the emerging industry of digital entertainment, beyond music subscriptions,” said Dave Morrish, executive vice president at Best Buy.
The deal that values the company at $2.65 per share roughly double what it was trading before the buyout. Napster’s board members approved the move late last week, and must view the exit strategy as a win considering Napster’s financial situation. The purchase includes Napster’s cash horde of $67 million, and their subscriber base of around 600,000. Napster’s stock has dropped nearly 57% over the past year, and nearly 62% over the past two years.