Bertelsmann buys e-tailer CDnow

Bertelsmann, the privately owned German media group, yesterday agreed to pay $159m (£106m) in cash and credit guarantees to acquire CDnow, the online music retailer.

Bertelsmann, the privately owned German media group, yesterday agreed to pay $159m (£106m) in cash and credit guarantees to acquire CDnow, the online music retailer.

Bertelsmann will pay $3 per share in cash, or $117m, and will guarantee financing of $42m to secure existing loans and fund CDnow's loss-making operations until the deal closes.

Founded in 1994 by twins Jason and Matthew Olim intheir parents' Pennsylvania home, CDnow became one of the Net's most recognisable retail brands. However, its combined losses to the end of March were $212m. It floated in 1998 at $16 a share, peaking last year at $35. Since then continued losses and the bear market in Net stocks saw the shares plunge.

Bertelsmann already owns online music retailer Getmusic, but its recognition as an online brand is minimal. CDnow brings 3.7 million online music customers and operations in eight countries.

The management team, including Jason Olim, is expected to stay with the company.