Eight months after beating MP3.com in court, Vivendi Universal, the world's largest record company announced yesterday (May 20) that it will acquire the online music provider in a $372 million cash-an

Eight months after beating MP3.com in court, Vivendi Universal, the world's largest record company announced yesterday (May 20) that it will acquire the online music provider in a $372 million cash-and-stock deal. The Paris-based conglomerate -- which owns labels such as Interscope, MCA, Mercury, A&M, Motown, Island, and Def Jam -- said the deal will advance its efforts to create an online digital music subscription service.

"MP3.com will be a great asset to Vivendi Universal in meeting our goal of becoming the leading online music service provider," Jean-Marie Messier, chairman and chief executive officer of Vivendi Universal, said in a statement.

Vivendi said the deal, which it called a "friendly" transaction, will help it "strongly reinforce" its efforts in "the strategic areas of online music, subscriptions, branding, technology, and all its content." Vivendi said San Diego-based MP3.com's board approved the deal and it expects shareholder approval.

MP3.com will be a likely candidate to provide content for Vivendi Universal's Duet, an online digital music subscription service it is developing jointly with Sony Corp., said Anita Larsen, a spokeswoman for Vivendi in New York.

The Duet service is expected to launch this summer with streaming music and plans to add downloads sometime thereafter. Vivendi said it will have thousands of songs on the Internet from its own Universal Music Group and Sony Music Entertainment labels available in a fee-based subscription model.

Details about how the service will work and how much it will cost have not been announced. Financial terms of the deal also were not revealed.

The acquisition of MP3.com will help Vivendi reach more than 40 million more registered users on the Internet. The online company will continue its own services while developing new offerings with its new owner, said Michael Robertson, MP3.com chairman and chief executive officer.

The two companies were adversaries last year. Of five major record companies that sued MP3.com over copyright violations, Vivendi Universal was the only one that refused to settle before the case went to trial.

In September, a federal court judge in New York ruled that MP3.com had intentionally violated the copyrights of the music companies, and awarded Universal Music Group penalties that could have reached as much as $250 million. Two months later, MP3.com agreed to pay the company $53.4 million.

Along with the Universal Music Group, Vivendi Universal owns Universal Studios, a 51% stake in European pay-TV provider Canal, and other holdings.

UMG has been gobbling up online companies during the past two months in order boost its online presence. In April, it bought out BMG Entertainment from its 50% stake in music media company GetMusic, which subsequently merged with UMG's Farmclub.com. UMG has also entered into a merger agreement with Emusic.com, which owns one of the largest MP3 music libraries.


-- AP & Hollywood Reporter



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