Universal Music Group to Acquire EMusic for $23 Million

The market for legitimate music downloads has been getting hotter over the past week as record labels, technology companies and online distributors look for their piece of the post-Napster pie. In a move which will likely supply Duet, the online subscription service formed by a Sony/Universal Music Group (UMG) partnership, with the technology it needs to launch, as well as save the wayward EMusic from being de-listed on the Nasdaq, EMusic and UMG announced that they have signed a definitive merger agreement.

Under this agreement, UMG will commence a cash tender offer to acquire all of EMusic's outstanding shares at a price of $0.57 per share — making the deal worth approximately $23 million.

EMusic states that its board of directors has unanimously approved the transaction and directors and current and former officers, who beneficially own an aggregate of approximately 17 percent of the company's outstanding shares, have each individually agreed to tender their shares.

"We believe that this transaction is in the best interests of our stockholders," said Gene Hoffman, EMusic president and CEO in a statement. "The addition of EMusic and RollingStone.com to Universal Music Group has some very exciting potential for online music fans."

Either party can terminate the agreement if the offer is not completed by June 25, 2001.