Liquid Amends Alliance Entertainment Deal

Redwood City, Calif.-based Liquid Audio on Monday
announced it would amend terms of its merger agreement with Alliance
Entertainment, a deal that gives Alliance a bigger stake of the combined
firm.

The digital media software firm, which was acquired last
month in an all-stock transaction, said the amended agreement would give
Alliance a 74 percent chunk of the combined company. When the deal was
first announced, Liquid Audio said it would issue about 46.2 million new
shares to Alliance, which would own a 67 percent majority stake in the new
entity.

Under terms of the amended deal, Liquid Audio plans to conduct a self-tender
offer under which it would acquire 10 million shares of at $3.00 per share
in cash in connection with the merger.


“Approximately 12.75 million shares
of Liquid Audio stock would remain outstanding after completion of a
fully-subscribed tender offer. After the resulting merger, Liquid Audio
stockholders will own 26 percent of the combined enterprise and Alliance
Entertainment stockholders will own 74 percent,” the company said.

Liquid Audio also disclosed that its board of directors also considered a
proposal by Steel Partners to purchase the company outright for $2.75 per
share but found the offer “inadequate.”

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