Struggling CDNow’s Shares Soar on Merger-Talk News

CDNow Inc. (ticker symbol: CDNW) said Friday it’s in merger talks, and the announcement was music to the ears of the company’s beleaguered shareholders.

The Internet music seller said it expects to announce a merger transaction or investment, or both, by the end of the month. Shares of Fort Washington, Pa.-based CDNow rocketed $2.56 to $4.88 on Nasdaq.

The company has begun meeting with a short list of interested merger candidates. Their identities weren’t disclosed.

CDNow has been seeking new capital after piling up more than $200 million in losses since 1994. In March, its auditor expressed “substantial doubt” about the company’s ability to stay in business. A merger with Columbia House, the music business jointly owned by Sony and Time Warner, was called off that same month.

CDNow shares are still down 80% from their 52-week high.