Archive notice: This article was originally published on May 21, 2003. Links and embedded videos are preserved as part of the historical record.
As part of the agreement, Roxio has acquired essentially all shares in Pressplay, the joint venture between Universal Music Group (UMG) and Sony Music Entertainment (SME) and one of the leading US online music services. Roxio acquired its majority stake for 12.5 million US dollars in cash and approximately 3.9 million Roxio common shares. Based on the value of the stock at market close on May 16, 2003, the purchase price is equivalent to approximately 39.5 million US dollars, excluding transaction costs, which amount to around one million US dollars. In addition, SME and UMG each have the right to withdraw up to 6.25 million US dollars from the positive cash flow of the new Napster service. UMG and SME will each be represented by one representative on Roxio’s supervisory board.
Elliot Carpenter, Chief Financial Officer of Roxio, comments on the financial effects of the transaction as follows: “We plan to invest about 20 million US dollars in the launch of Napster. For the period after the relaunch, we assume that the new business will initially bring negative cash flow until the offering is accepted across the board.” Roxio will give a more detailed outlook on the financial burdens from this transaction for the first quarter of fiscal year 2004 (ending June 30, 2003) when it announces the 2003 annual results on May 21, 2003.
