UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14D-9
(RULE
14d-101)
SOLICITATION/RECOMMENDATION
STATEMENT UNDER SECTION 14(d)(4)
OF
THE SECURITIES EXCHANGE ACT OF 1934
Napster,
Inc.
(Name
of
Subject Company)
Napster,
Inc.
(Names
of
Person(s) Filing Statement)
Common
Stock, par value $0.001 per share
(Title
of
Class of Securities)
630797108
(CUSIP
Number of Class of Securities)
Wm.
Christopher Gorog
Chief
Executive Officer and Chairman of the Board
Napster,
Inc.
9044
Melrose Avenue
Los
Angeles, California 90069
(310)
281-5000
(Name,
Address, and Telephone Numbers of Person Authorized to Receive Notices and
Communications
on Behalf of the Person(s) Filing Statement)
With
a copy to:
David
Krinsky, Esq.
O’Melveny
& Myers LLP
610
Newport Center Drive, Suite 1700
Newport
Beach, California 92660
(949)
760-9600
ý
|
|
Check
the box if the filing relates solely to preliminary communications
made
before the commencement of a tender
offer.
|
Napster,
Inc. and Best Buy Co., Inc. released the following joint press release on
September 15, 2008.
FOR
IMMEDIATE RELEASE
Best
Buy Contacts:
Media Contacts:
|
Investor
Contacts:
|
Susan Busch, Director, Corporate PR
|
Jennifer Driscoll, Vice President, Investor
Relations
|
(612) 291-6114 or
|
(612) 291-6110 or
|
susan.busch@bestbuy.com
|
jennifer.driscoll@bestbuy.com
|
|
|
Brian Lucas, Sr. Manager, Corporate
PR
|
Wade Bronson, Director, Investor
Relations
|
(612) 291-6131 or
|
(612) 291-5693 or
|
brian.lucas@bestbuy.com
|
wade.bronson
@bestbuy.com
|
|
|
Napster Contacts:
|
|
|
|
Media Contact:
|
Investor
Contact:
|
Jeff Fox
,
Media Specialist
|
Alex Wellins, Managing Director
|
The Blueshirt Group, for Napster
|
The Blueshirt Group, for Napster
|
(415) 828-8298 or
|
(415) 217-5861 or
|
jeff@blueshirtgroup.com
|
alex@blueshirtgroup.com
|
Best
Buy to Acquire Napster
MINNEAPOLIS
AND LOS ANGELES (Sept. 15, 2008) - Best Buy Co., Inc. (NYSE:BBY) and Napster,
Inc. (NASDAQ:NAPS) announced today that the two companies have entered into
a
definitive merger agreement for Best Buy to commence a tender offer for all
outstanding Napster shares at a price of $2.65 per share in cash. The
transaction, with an aggregate purchase price of approximately $121 million
(or
$54 million net of approximately $67 million in cash and short-term investments
of Napster as of June 30, 2008), is subject to customary closing conditions,
including the tender of a number of Napster shares that constitutes a majority
of Napster’s outstanding shares of common stock (on a fully-diluted basis). The
transaction is expected to close during the fourth calendar quarter. The
transaction has been unanimously approved by the board of directors of Napster,
and Napster’s directors and certain officers have agreed, in their capacities as
stockholders, to tender their Napster shares and otherwise support the
transaction.
The
proposed acquisition includes Napster’s approximately 700,000 digital
entertainment subscribers, its Web-based customer service platform, and
innovative mobile capabilities. In conjunction with the definitive merger
agreement, Napster CEO Chris Gorog and key members of senior management of
Napster have entered into employment agreements, effective at closing, pursuant
to which they have agreed to continue as the Napster leadership
post-acquisition.
Best
Buy
believes that Napster has one of the most comprehensive and easy-to-use music
offerings in the industry, including streaming music, music subscriptions,
the
ability to purchase individual tracks, albums and mobile offers. Napster has
approximately 140 employees, with its headquarters in Los Angeles. At this
time,
Best Buy does not plan to relocate Napster’s headquarters or to make significant
changes in personnel.
“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.”
Best
Buy
intends to use Napster’s capabilities and digital subscriber base to reach new
customers with an enhanced experience for exploring and selecting music and
other digital entertainment products over an increasing array of devices. Best
Buy believes the combined capabilities of the two companies will allow it to
build stronger relationships with customers, expand the number of subscribers,
and capture recurring revenue by offering ongoing value over a mobile digital
platform.
“We
believe Napster brings us excellent capabilities in the mobility space, as
well
as international operations and an established team of technology experts,” said
Dave Morrish, Executive Vice President - Connected Digital Solutions of Best
Buy. “We can foresee Napster acting as a platform for accelerating our growth in
the emerging industry of digital entertainment, beyond music subscriptions.
We’re very excited to add these capabilities to leverage our existing
relationships with the labels, the studios, and the hardware providers. We
believe Napster will be an outstanding addition to our already robust portfolio
of partners and offerings in the digital music space.”
“We
believe Best Buy will be an ideal partner for Napster and are very excited
by
the benefits that this transaction delivers to our shareholders, partners and
employees. Best Buy is uniquely positioned to benefit from Napster’s digital
entertainment distribution platform. We are looking forward to combining our
digital media capabilities with Best Buy’s resources and global network to
extend our digital content platforms,” said Chris Gorog, chairman and CEO of
Napster.
Under
the
terms of the definitive merger agreement, Best Buy will commence a cash tender
offer to purchase all of the outstanding shares of Napster common stock for
$2.65 per share in cash, with a supporting recommendation from the Napster
Board
of Directors. The closing of the tender offer is subject to customary terms
and
conditions, including the tender of a number of shares that constitutes a
majority of Napster’s outstanding shares of common stock (on a fully diluted
basis) and expiration or termination of the waiting period under the Hart Scott
Rodino Antitrust Improvement Act. The agreement also provides for the parties
to
effect, subject to customary conditions, a merger to be completed following
the
completion of the tender offer which would result in all shares not tendered
in
the tender offer (other than shares held by Best Buy, treasury shares, and
shares held by Napster shareholders, if any, who properly exercise appraisal
rights) being converted into the right to receive $2.65 per share in cash.
The
directors and certain officers of Napster have entered into agreements with
Best
Buy pursuant to which they have agreed to tender their shares in connection
with
the tender offer contemplated by the merger agreement and otherwise support
the
transaction.
Napster,
which recently launched one of the world’s largest MP3 stores, 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.
Best
Buy
intends to complete the acquisition using available cash. UBS Investment Bank
served as the exclusive financial advisor to Napster, and Napster is represented
by O’Melveny & Myers LLP. Best Buy is represented by Robins, Kaplan, Miller
& Ciresi L.L.P.
About
Best Buy
With
operations in the United States, Canada, Europe and China, Best Buy (NYSE:
BBY) is a multinational retailer of technology and entertainment products
and services with a commitment to growth and innovation. The Best Buy family
of
brands and partnerships collectively generates more than $40 billion annual
revenue and includes brands such as Best Buy, Audiovisions, The
Carphone Warehouse, Future Shop, Geek Squad, Jiangsu Five Star, Magnolia Audio
Video, Pacific Sales Kitchen and Bath Centers, and Speakeasy. Approximately
150,000 employees apply their talents to help bring the benefits of these brands
to life for customers through retail locations, multiple
call centers and web sites, in-home solutions, product delivery
and in our communities. Community partnership is central to the way we do
business at Best Buy. In fiscal 2008, we donated a combined $31.8 million
to improve the vitality of the communities where our employees and customers
live and work. For more information about Best Buy, visit
www.bestbuy.com
.
About
Napster
Napster,
the pioneer of digital music, offers the ultimate in interactive music
experiences, creating better ways to discover, share, acquire and enjoy music
--
anytime, anywhere. The Company’s offerings include “Napster” (www.napster.com)
-- the premier online music destination featuring the most popular on-demand
music subscription service in the world and the largest, most comprehensive
MP3
download store on the market; “FreeNapster” (www.freeNapster.com) -- a unique
Web experience offering free on demand music legally; and “Napster Mobile” --
one of the industry’s fastest growing mobile music platforms. Headquartered in
Los Angeles, Napster’s services are available in markets across the Americas,
Europe and Japan.
Forward
Looking Statements
This
news
release contains forward-looking statements within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995 as contained in Section 27A
of
the U.S. Securities Act of 1933 and Section 21E of the Securities Exchange
Act
of 1934 that reflect Best Buy and Napster managements’ current views and
estimates regarding future market conditions, company performance and financial
results, business prospects, new strategies, the competitive environment and
other events. You can identify these statements by the fact that they use words
such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “project,”
“plan,” “outlook,” and other words and terms of similar meaning. These
statements involve a number of risks and uncertainties that could cause actual
results to differ materially from the potential results discussed in the
forward-looking statements. Among the factors that could cause actual results
and outcomes to differ materially from those contained in such forward-looking
statements are the following: failure to meet the minimum tender condition
or
obtain any required stockholder or regulatory approvals or satisfy other
conditions to the transaction; failure to achieve anticipated benefits of the
transaction; and integration challenges relating to the acquisition. Other
factors include the following: general economic conditions, acquisitions and
development of new businesses, divestitures, product availability, sales
volumes, pricing actions and promotional activities of competitors, profit
margins, weather, changes in law or regulations, foreign currency fluctuation,
availability of suitable real estate locations, Best Buy’s and Napster’s ability
to react to a disaster recovery situation, and the impact of labor markets
and
new product introductions on overall profitability. A further list and
description of risks, uncertainties and other matters can be found in Best
Buy’s
and Napster’s annual reports and other reports filed from time to time with the
U.S. Securities and Exchange Commission (“SEC”), including, but not limited to,
Best Buy’s Annual Report on Form 10-K filed with the SEC on April 30, 2008, and
Napster’s Annual Report on Form 10-K filed with the SEC on June 11, 2008. Best
Buy and Napster caution that the foregoing list of important factors is not
complete and assume no obligation to update any forward-looking statement that
it may make.
Additional
Information and Where to Find it
The
tender offer for the outstanding common stock of Napster has not yet commenced.
This document is for informational purposes only and is not an offer to buy
or
the solicitation of an offer to sell any securities. The solicitation and the
offer to buy shares of Napster common stock will be made only pursuant to an
offer to purchase and related materials that Best Buy intends to file with
the
SEC on Schedule TO. Napster also intends to file a solicitation/recommendation
statement on Schedule 14D-9 with respect to the offer. Napster stockholders
and
other investors should read these materials carefully because they contain
important information, including the terms and conditions of the offer. Napster
stockholders and other investors will be able to obtain copies of these
materials without charge from the SEC through the SEC’s Web site at www.sec.gov,
from the Information Agent named in the tender offer documents, from Best Buy
(with respect to documents filed by Best Buy with the SEC), or from Napster
(with respect to documents filed by Napster with the SEC).
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