Minneapolis - Consumer electronics and media retail store chain Best Buy (NYSE: BBY) announced on Monday that it has agreed to acquire digital music service Napster (NASD: NAPS) for $121 million, or $2.65 per share -- nearly double the company's closing price on Friday. "We believe Best Buy will be an ideal partner for Napster and are very excited by the benefits that this transaction delivers to our shareholders, partners and employees," said Napster chairman and CEO Chris Gorog. "We are looking forward to combining our digital media capabilities with Best Buy's resources and global network to extend our digital content platforms."

The deal also includes $67 million in cash and investments held by Napster, putting the net purchase price at about $54 million, Best Buy said.

Napster had fiscal 2008 revenue of $127.5 million, and a loss of $16.5 million.

Best Buy will also be acquiring Napster's 700,000 digital entertainment subscribers, and "intends to use Napster's capabilities and digital subscriber base to reach new customers with an enhanced experience for exploring and selecting music and other digital entertainment products over an increasing array of devices."

"We can foresee Napster acting as a platform for accelerating our growth in the emerging industry of digital entertainment, beyond music subscriptions," said Dave Morrish, executive vice president of connected digital solutions at Best Buy.

"We're very excited to add these capabilities to leverage our existing relationships with the labels, the studios, and the hardware providers."

Best Buy said that at this time it does not plan to relocate Napster's headquarters or to make significant changes in personnel.

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