Monday, October 16, 2006

Napster (NAPS) Higher On Renewed M&A Chatter Following Analyst Note

Napster Inc. (Nasdaq: NAPS) is higher today on renewed takeover speculation following a research note from ThinkEquity analyst Darren Aftahi. The analyst said he doesn't expect a slowdown in M&A in the digital media sector, leaving NAPS as a prime target. He said the value of Napster in a deal is $5-$7 per share, but probably closer to the higher end.

In September, Napster said in response to recent third party interest in establishing strategic partnerships or potentially acquiring the company, it has retained UBS Investment Bank to assist the Board and management in its evaluation of strategic alternatives.

In today's research report, Aftahi said Napster is of more value to an acquirer with a very broadmarket reach. He said, "While we acknowledge there could be as many as 10-15 potential acquirers looking at Napster, we believe deals that make the most sense would include (NASDAQ: AMZN), InterActive Corp. (NASDAQ: IACI), Google (NASDAQ: GOOG), XM Satellite (NASDAQ: XMSR) and SanDisk (NASDAQ: SNDK).

Shares of Napster are 3.7% higher to $4.46 in afternoon action Monday.


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