updated 05:50 pm EDT, Mon August 9, 2004
Roxio becomes \'Napster\'
for a total purchase price of $80 million ($70 million in cash and $10 million in Sonic shares). Sonic says it believes the acquisition will provide Sonic with "a well-recognized set of consumer software brands; access to long-standing distribution channels; strong product marketing expertise; and key relationships with top-tier retail outlets." Roxio says it plans to focus its business on the digital music market and will change its corporate name to Napster and trade under the ticker "NAPS" on NASDAQ.
"This combination will create an extremely strong provider of digital media creation software," said Bob Doris, president and chief executive officer of Sonic. "We believe the acquisition of Roxio's consumer software division increases our reach with a proven brand; a tremendous sales and support platform; and a strong retail channel with national retailers such as Best Buy, CompUSA and Fry's Electronics. We'll be able to augment our Sonic team with the highly professional and experienced members of the Roxio software organization resulting in a truly world class organization in terms of technology development, major OEM delivery, and retail distribution. With the growth that we will unlock in the Roxio product line, and the many ways in which the two organizations complement each other, we will be able to drive shareholder value through strong revenue growth and profitability."
"With the successful completion of the transaction, Napster will emerge as a well-positioned pure-play in the fast-growing digital music sector with a substantially enhanced balance sheet that will support our growth plans," said Chris Gorog, Roxio's chairman and chief executive officer.
Sonic said it will purchase essentially the entire Roxio software operation including Roxio's CD and DVD recording, authoring, photo and video editing application products including Easy Media Creator, PhotoSuite, VideoWave, Easy DVD Copy and Toast. Sonic says it expects to retain most of the current employees of the Roxio organization and intends to continue the Roxio brands, and current distribution and OEM relationships.
The deal is expected to close in the fourth quarter of 2004.