Bertelsmann To Acquire CDNOW

IRCE 2008 Conference Multi-Media CD-ROM

Global media giant Bertelsmann AG says that it will acquire online music destination CDNOW Inc. in an all-cash tender offer for $3.00 per share, or approximately $117 million. The transaction is expected to close during the fall of 2000. CDNOW will become a wholly owned subsidiary of Bertelsmann e-Commerce Group, which was established earlier this year to drive Bertelsmann's global e-content, community and commerce business. The site will continue to operate under the CDNOW brand once the transaction closes. It will also become Bertelsmann's primary engine for all music commerce across online, mobile and broadband platforms and evolving technologies such as digital downloading and streaming, it says. CDNOW will be integrated as the music distribution platform into all Bertelsmann assets. In addition, CDNOW will work with GetMusic, an online music joint venture between Bertelsmann's BMG Entertainment and Universal Music Group, to feature GetMusic's content.

Bertelsmann will advance to CDNOW about $42 million in financing to pay off existing loans and to fund CDNOW's ongoing operations until the close of the transaction, the Germany-based company says. CDNOW will continue to be headquartered in Fort Washington, Pa. The management team is expected to remain with the company.