Germany's music publisher Bertelsmann AG is to acquire the loss-making online music retailer CDNow for approximately £80 million.

CDNow has been actively seeking a buyer since a planned merger with Columbia House collapsed in March, leaving the company short of cash.

Bertelsmann will advance CDNow approximately £28 million to pay off existing loans and fund ongoing operations until the merger is finalized in the third quarter of this year, the company said in a statement.

CDNow will continue to operate under its own name from its Fort Washington, Pennsylvania, base, the German company said, but will be integrated into the Bertelsmann e-Commerce Group as the music distribution centre across online, mobile, and broadband platforms.