Change of Tune

Best Buy (Minneapolis) announced that it has sold its money-losing Musicland division to private investment firm Sun Capital Partners (Boca Raton, Fla.). Through the sale, Sun Capital acquires all of Musicland's capital stock. In exchange, the firm agreed to assume all of Musicland's liabilities, including lease obligations. No cash changed hands in the deal.

Best Buy, which purchased Musicland in December 2000 for $425 million, stated in March that it planned to sell Musicland. In its most recent completed quarter, the specialty electronics retailer reported Musicland's sales fell 22 percent from the same period last year, and same-store sales dropped 15 percent.

There are currently 1137 Musicland stores, whose chains include Sam Goody, Suncoast and Media Play.

“We are pleased to join the Sun Capital organization,” says Connie Fuhrman, who remains president of Musicland. “We are energized by Sun Capital's record of restoring companies to profitability within its first year of ownership.”

Sun Capital will assume all of Musicland's operating assets, except for a distribution center in Franklin, Ind., which Best Buy will continue to operate.

“Musicland is the nation's leading entertainment software retailer,” says Jason Neimark, principal of Sun Capital. “We are pleased to build on its long-standing vendor relationships, loyal customer base and technological infrastructure.”