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Dissident Fund Could Raise Offer for Liquid Audio

A dissident investor in Liquid Audio Inc. that has offered to buy the company for some $68 million in cash said on Thursday it could pay more if the company’s board will meet and make a case for that.

Liquid Audio has said the unsolicited $3-per-share offer sent this week from New York-based Steel Partners II will be considered at the next board meeting, although it has not said when that would be.

In a public letter send to the Liquid Audio board on Thursday, Steel Partners managing partner Warren Lichtenstein called for an early meeting with the Liquid Audio board, saying “the company’s value diminishes daily.”

“If the board can demonstrate to us at such a meeting that there is additional value inherent in the company that we do not currently recognize, we would consider increasing our offer,” Lichtenstein said.

Steel Partners sent a letter in early September demanding Liquid Audio’s management sell the company and calling its strategy doomed in the face of larger competitors.

The $3-per-share purchase offer, a 27 percent premium at the time it was made, now represents a premium of 18.6 percent, based on Liquid Audio’s closing price of $2.53 on Thursday.

Liquid Audio, which at its peak in Nov. 1999 had a market capitalization of $1 billion, had a capitalization of $57.2 million as of Thursday’s close.

The chief executive of online music company Musicmaker.com Inc. told Reuters on Wednesday his company would also consider making an offer for Liquid Audio.

Musicmaker, which owns 6.3 percent of Liquid Audio, requested a special meeting of Liquid’s board earlier this month for the purpose of adding Musicmaker executives to Liquid Audio’s board.

Liquid Audio rejected that request.

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