Best Buy wants to be more than a bricks-and-mortar music outlet
Consumer electronics giant Best Buy has entered the online music arena, purchasing the Napster online music service for $121m (Ł67.5m) in cash and investments.
The acquisition values Napster at $2.65 a share, more than twice its market value on Friday.
Best Buy said the move was to "reach new customers" and leverage Napster's 700,000 existing subscribers.
The deal is expected to be completed in the fourth quarter of 2008.
Best Buy said Napster's easy-to-use interface, streaming music and mobile offerings were the service's key strengths.
"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, an executive vice president of Best Buy in a statement.
Napster reinvented itself as a music subscriber business after reaching fame and drawing fire from the music industry as a peer-to-peer file-sharing network. The company now claims to have 700,000 members.
Prior to the deal Napster had itself been acquiring smaller online music outlets, such as those run by Virgin Digital and AOL. However, the company's stock has fallen 57% in the past year, and it reported a $16.5m loss for its 2008 financial year.