The planned acquisition of CDNow Inc. by Columbia House has been called off. Instead, Columbia House’s joint owners, Sony Corp. and Time Warner Inc., will be equity investors in the music e-tailer.
The companies have committed $51 million to CDNow. In addition to $21 million in cash by buying 2,405,500 shares of common stock, an existing $30 million short-term loan will be converted into the long-term convertible debt.
In a statement, CDNow president and chief operating officer Jason Olim expressed his disappointment that the merger did not go through, adding that the company would begin looking for other strategic opportunities.
As reported first in DIRECT Newsline, Columbia House let go 2% of its work force in anticipation of the merger (see also DIRECT, March 15, 2000).
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