Best Buy to acquire Napster to boost online music sales

NEW YORK - Best Buy Co., the largest US electronics retailer, agreed to buy Napster Inc., the pioneer of digital-music downloading, for $121 million as it tries to move music sales online and counter waning demand for compact discs.

Napster shareholders will get $2.65 a share, almost double the Los Angeles-based company's price on Friday, Best Buy said yesterday. Napster has about 700,000 subscribers and half of the market for digital-music subscription services.

Best Buy, based in Richfield, Minn., is using its clout as the dominant chain in home electronics to expand its services while Circuit City Stores Inc. and RadioShack Corp. struggle to increase sales. Circuit City currently offers Napster downloads through its website.

Best Buy declined 79 cents, or 1.8 percent, to $43.70 in New York Stock Exchange composite trading as the broader market plunged. Napster jumped $1.17, or 86 percent, to $2.53 in Nasdaq Stock Market trading.

Best Buy has been looking for ways to become an online music seller, and offers music downloading with Real Networks Inc. Best Buy said it foresees expanding Napster to include movies and television shows.