Extending its aggressive push toward competing in the online music subscription market, the record company arm of French media conglomerate Vivendi Universal said it will acquire EMusic.com and its RollingStone.com, EMusic.com and Downbeat.com websites, in a deal valued at approximately $23m.
Under the agreement, Universal Music Group will begin its all-cash offer of 57 cents a share for each of EMusic's 32.2 million outstanding shares.
Universal will gain EMusic's catalog of 165,000 tracks and licensing agreements with 700 independent record labels.
The deal also stipulates that EMusic will own at least $5m in cash and securities by 30 April and will not depreciate more than $48,000 for each day after the offer closes. Either party can terminate the agreement if the offer is not completed by 25 June this year.
Larry Kenswil, president, eLabs, at Universal, explained that EMusic complements the company's other digital and internet initiatives. "EMusic represents a tremendous group of assets that appeal to a wide range of music fans," he said.
An early seller of MP3 downloads, EMusic.com has struggled to get consumers to buy digital songs or subscribe to its catalogue of independent artists.
Universal previously announced the formation of Duet, an online subscription service jointly backed by Sony Music Entertainment. Duet recently unveiled a non-exclusive agreement to offer its services through Yahoo. Universal owns a number of record labels including A&M, Interscope and Motown.
EMusic's board of directors has approved the transaction, and the tender offer will be filed on or before 20 April with the Securities and Exchange Commission.
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