CDNow, Inc. (Nasdaq: CDNW) fell 1 7/16 to 8 after the online music retailer said a plan to merge with Columbia House collapsed. The company will instead “explore its strategic options” with the help of Allen & Co.
CDNow agreed in July to be bought by Columbia House, which is owned by Sony Corp. and Time Warner, Inc. Since then, CDNow shares have fallen some 60 percent. The company said it will “review the complete range of strategic opportunities available” to boost shareholder value and build market share.
Allen & Co. will also provide $51 million in funding, consisting of a $21 million equity investment and the conversion of a $30 million short-term loan into long-term debt.