A Little Takeover Music Please

French media and communications company Vivendi Universal agreed to pay $5 a
share to buy MP3.com Inc. , whose stock closed Friday at $3.01.

Vivendi said that it will acquire San Diego-based MP3 for $372
million and will use the company’s assets to reinforce its digital efforts in
online music, subscriptions, branding and technology.

The premium of almost $2 a share is attractive, but the stock is still well
down from its 52-week high of $22.50 a share.

MP3.com will continue to function as an independent distributor of music
content for all record labels and independent artists, Vivendi said.

Vivendi said MP3.com is a candidate to provide state-of-the-art technical
contributions for Duet, its joint venture with Sony Music, to create an
online digital music subscription service. Duet is expected to launch this

Vivendi also gets MP3.com’s Music InterOperating System, designed to allow the music business to
interoperate in new ways by connecting retailers, labels, music players, and
hardware and software tools.

Michael Robertson, MP3.com founder, chairman and chief executive officer,
will become a special adviser to Jean-Marie Messier, chairman and chief
executive officer of Vivendi Universal, with regard to digital distribution.

“The MP3.com strategic acquisition is a big step forward for Vivendi
Universal’s priority to develop and implement an aggressive, legitimate and
attractive offering of our content to consumers,” said Messier. “…their
engineering and digital expertise will be a tremendous advantage for Vivendi
Universal, especially in the digital distribution of all (our) content and
the creation of common technology platforms.”

The deal was structured so that MP3.com shareholders have the ability to
elect $5 per share in cash, a number of Vivendi Universal shares (in the form
of American Depositary Receipts) having a value of $5, or any combination

There are currently over 150,000 artists from more than 180 countries that
make their music available to music fans through MP3.com.

“We will continue with our current MP3.com pursuits, but also work with our
new partners to innovate subscription systems and music offerings that reach
a global audience across many devices,” Robertson said.

Vivendi’s media
and communications business is divided into five business segments: Music,
Publishing, TV and Film, Telecoms and Internet.

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