From the corner room of his modest single-story tract home in Encino, Perry Rod waged battle against a digital music icon.
It was a difficult fight. Rod, a 29-year-old independent investor, and two like-minded dissident investors were seeking seats on the board of Napster Inc., the struggling online music provider.
The company fought back, dismissed Rod as "the musician" with no experience and then, three days before the outcome would be decided at its annual shareholder meeting, announced it was selling itself to Best Buy Inc.
Now Rod, the son of Iranian immigrants, claims the fight he launched played a crucial role in the $121 million acquisition deal, announced in mid-September. He said support for his slate heading into the annual shareholder meeting was "overwhelming" and pressured management into the sale.
Napster executives scoff at the notion that Rod and his fellow dissidents had any impact. Best Buy's tender offer for Napster, filed Sept. 26, shows it first approached Napster about a purchase in January roughly the same time Rod began to explore a proxy battle.
In his first extensive interview since the acquisition, Rod described the sale as bittersweet. He estimated he will turn a modest profit on his 73,000 shares less than 0.15 percent of the company if the acquisition is approved.
But he also felt the deal undervalues Napster and that the timing of the announcement undermined the proxy vote.
"I didn't anticipate they would sell in a fire sale three days before the annual meeting," Rod said.
A self-taught investor, Rod studied philosophy and politics at Georgetown University but harbored an interest in the stock market as far back as high school. He first bought Napster shares in 2006 because he thought the company with one of the largest digital music libraries in the industry sounded too good to fail.
Napster, formerly Roxio, purchased the name of the notorious illegal file-sharing Web site founded by entrepreneur Shawn Fanning. When the company moved to Los Angeles from Santa Clara in 2003, it looked like the company could turn online music subscriptions into a viable business.
But Napster shares fluctuated wildly. Bitter at what he saw as poor management, Rod sold his stake in Napster for a loss.
When Napster stock dipped below $2 in January, Rod decided to re-invest with the goal of becoming an activist shareholder and winning a seat on the board.
He scoured Internet message boards and e-mailed in search of fellow frustrated investors with the desire and stamina to wage a proxy fight. Thomas Sailors, a Texas investment manager, and Kavan Singh, a Missouri-based owner of a chain of Cold Stone Creamery franchises, volunteered.
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- Proxy Advisors Back Napster Management
- Three Shareholders Wage Proxy Battle With Napster
- Dissident Napster Investors Seek Board Seats
- Best Buy to Acquire Napster
- Software Company Has More in Store for Retailers
- Tune-Up in the Cards for Online Music Service
- Bad Blood Fills the Boardroom
- Investors Gird for Second Attempt to Split Drug Maker