Summary:

Liquid Audio Rejects Buyout Offer: Online music company Liquid Audio, which runs a digital music subscription service, has rejected a buyout…

Liquid Audio Rejects Buyout Offer: Online music company Liquid Audio, which runs a digital music subscription service, has rejected a buyout offer from one of its investors, choosing instead to amend a current takeover agreement that has been criticized by some major shareholders.

Liquid Audio, based in Redwood, Calif., said the offer by Steel Partners II to buy it for $2.75 per share was inadequate. Steel Partners owns 9.1 percent of the company and has opposed Liquid Audio’s reverse-merger deal with Alliance Entertainment.

Under the amended terms of its deal with privately held Alliance, Liquid Audio now will first buy 10 million of its shares–about 44 percent of its existing shares–for $3 each in a cash tender offer. It then will proceed with the reverse merger with Alliance–under which it will issue 36.3 million new shares to Alliance shareholders.

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