Napster has been acquired by BestBuy for $121m after a tumultuous history.
Napster began in 1999 as an illegal file-sharing site, before folding under the pressure of numerous record company lawsuits in 2002. The site re-emerged as a legal subscription service and earlier this year launched a DRM-free music download store.
Napster has been the subject of multiple rumours for some time now ... in July it was attracting the interest of hedge funds (see StrategyEye article) although of recent perhaps these funds have had more to occupy themselves ... and left the acquisition to a more mainstream offline / online retailer BestBuy.
Napster was trading at near $10 at start 2005 and fell to $1.4 at end of August, with the agreed acquisition price being $2.5 today, a decent 80% premium.
It will be interesting to see how BestBuy fares with this pioneer in the music space in light of the ongoing dominance of iTunes and seemingly inpenetrable iPod consumer mindset, not to mention a lot of deep pocketed players attempting different ways to tap into the music market.
This deal also comes interestingly on same day as the other online music announcement about MySpace planning to raise $100m for its music arm at a valuation of around $2bn ... (StrategyEye - MySpace Music set to raise $100m).
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