NEW YORK, 21 July 2000 (MaxisNet) - German media group Bertelsmann AG said it would pay US$117 million for cash-strapped online music seller CDnow in the latest sign of the demise of some formerly high-flying dot-coms.
Under the definitive merger agreement, Bertelsmann will acquire the company in an all-cash tender offer for US$3.00 per CDnow share. Bertelsmann will give CDnow US$42 million to pay off loans and fund ongoing operations until the deal closes.
The purchase price represents almost no premium to CDnow's market price.
Once the deal closes, CDnow will operate under its current brand name and become a subsidiary of Bertelsmann's electronic-commerce group, established earlier this year, the companies said.
CDnow's board has unanimously approved the merger agreement and will recommend the tender offer to shareholders, the companies said.
CDnow's cofounders, Jason Olim and Matthew Olim, have agreed to tender their 5.8 million shares, representing about 17 percent of all shares outstanding.