RealTime IT News

It's Now Liquid(ate) Audio

The sounds will soon stop flowing from Redwood City, Calif.-based Liquid Audio following a decision Friday to dissolve the company, sell its remaining assets and distribute the proceeds to shareholders.

It's the final chapter in the ongoing saga at the digital media software firm, which initially found a buyer for its assets only to have the deal scuttled by a group of uneasy shareholders.

Now, the company's board has voted for the complete dissolution of the company and a cash distribution of $2.50 a share to shareholders of record December 10. The cash is payable on December 30, the company said.

The company, which markets software that lets users download, listen and purchase copyright-protected digital media from the Web, will remain operational while the board looks for a buyer for the remaining assets.

Last month, Liquid Audio and privately-held Alliance Entertainment scrapped plans for an all-stock merger after a significant percentage of Liquid's shareholders balked at the price tag.

Because Liquid Audio has a substantial amount of cash reserves, the shareholders have been pushing for liquidation or an outright sale instead of a stock-for-stock merger.

Immediately after the deal fell apart, Liquid Audio's CEO Gerry Kearby quit the firm.

The company, which competes with digital media powerhouses like Microsoft and RealNetworks , has already sold its digital encoding patent rights to Microsoft in a $7 million cash deal and it's not a stretch to imagine the two rival giants will be picking at Liquid Audio's bones in the coming weeks.

The company's most valuable asset is the software targeting content producers. It lets content owners, Web sites and companies publish, syndicate and securely sell digital media online with copy protection and copyright management.

Liquid's principals could not be reached to discuss details of the sale plans.