Shares in troubled online music retailer
jumped Friday on news that Mexican billionaire Carlos Slim Helu had bought a 9.2% stake in the company for $52.8 million.
CDNow surged 1/2, or 13%, to 4 3/8 in midday trading. However, it was well short of its 52-week high of 23 1/4. (CDNow closed up 13/16, or 21%, at 4 11/16.)
The Fort Washington, Pa.-based company
said in March that it had hired investment bank
Allen & Co.
to help find it an investment or a merger partner after its proposed merger with
Slim, one of the richest men in Latin America with an array of investments in Internet and technology businesses, bought 3.03 million shares in the loss-plagued company. The billionaire paid an average of $17.43 per share for his stake. In his most recent purchases, he bought 50,000 shares over the last two months at prices between $3.83 and $8.27 per share, according to the filing.
Earlier this week, CDNow reported a loss of $28.2 million, or 92 cents per share, excluding special items, in the first quarter of 2000, a bigger loss than Wall Street had expected. When it reported earnings, CDNow said it had enough cash to last through the second quarter. At that time, CDNow President and Chief Executive Jason Olim said, "We are optimistic and expecting to be able to enter into an investment or merger agreement by the end of the second quarter."
The SEC filing said Slim was "engaged in discussions with (CDNow) regarding a possible additional investment, although neither the amount, form nor timing of such additional investment has been determined."
Slim's business empire includes Mexico's
financial group and the phone giant
Telefonos de Mexico
. He also owns
, a leading chain of computer retailing stores in the U.S.