NEW YORK (Variety) — Just months after Universal Music Group beat MP3.com to a pulp in federal court over copyright infringement, Universal's Vivendi Universal parent has agreed to buy the embattled net company in a cash and stock deal worth $372 million.
Under the terms of the pact, approved unanimously by MP3.com's board of directors, the music portal's shareholders have a choice between $5 per share in cash or $5 in Vivendi Universal's American depository receipts for each MP3.com share. MP3.com's Nasdaq-listed stock closed Friday at $3.01, down from a year-high of $22.50 last May.
The acquisition of MP3.com, best known for offering new artists a venue for distributing their music in digital form over the Internet, will give the conglomerate added tools and technical know-how for selling its own wares online, said Vivendi chairman Jean-Marie Messier.
"Their engineering and digital expertise will be a tremendous advantage for Vivendi Universal, especially in the digital distribution of all Vivendi Universal content and the creation of common technology platforms," Messier said.
The deal is the latest in a string of new online ventures and acquisitions for the U.S.-French media giant as it solidifies its plans to tackle music distribution in cyberspace. Last March, Vivendi Universal agreed to purchase the 50 percent of music site GetMusic that it didn't already own from BMG Entertainment, with an eye toward folding it in with Farmclub.com, Universal Music Group's site for up-and-coming artists. Then in April, Universal revved up its plans for Duet, a year-old online music subscription venture with Sony Music, by announcing that the service would bow by the end of summer and be marketed through Yahoo!
Also last month, Universal picked up troubled Emusic.com for just over $23 million. The company, which sold music downloads from more than 150,000 mostly independent labels, had seen its stock price plummet to a low of 16 cents per share as it fought an uphill battle against free-music network Napster.
Until Sunday, MP3.com had been one of the few remaining independents left in the online music space, and the relationship between the net company and Vivendi Universal had been far from harmonious.
Universal, along with the other four major labels, sued the company for copyright infringement over its My.MP3.com digital locker service. The other four majors settled for a reported $20 million each (plus another $30 million to placate music publishing organizations); Universal was the lone holdout, eventually winning a judgment worth $53.4 million.
Universal held out an olive branch, however, giving MP3.com a license to use its content in My.MP3.com and purchasing warrants to take a small minority stake in the company.
It was not immediately clear whether Vivendi Universal will assume liability for the remaining copyright suits still pending against MP3.com, including one filed by Jive Records parent Zomba Music.
The net company will continue operations as a standalone business, even as it integrates with Vivendi Universal's existing online music properties. MP3.com Chairman Michael Robertson will act as a special adviser to Messier on digital distribution issues.