PARIS (Agefi-Dow Jones)–French music streaming platform Deezer on Monday announced its merger with a listed investment vehicle (Spac) with a view to going public at an estimated valuation of 1.05 billion euros.
Deezer has agreed to merge with I2PO, a company controlled by the Pinault family and investment banker Matthieu Pigasse, and run by the former boss of WarnerMedia in France and several European countries, Iris Knobloch. Merger talks were reported last week by the Wall Street Journal.
I2PO was introduced last year on the Paris Stock Exchange, with the support of Artemis, the holding company of the Pinault family and main shareholder of the luxury giant Kering, and Combat Holding, an entity chaired by Matthieu Pigasse. I2PO had collected nearly 275 million euros on this occasion.
A competitor to Spotify and other online music services, Deezer has 9.6 million paying subscribers and generated revenue of 400 million euros in 2021. Founded in 2007, the service offers a catalog of more than 90 million titles to its subscribers, as well as podcasts, radio stations and audio books.
The platform is still in the red and aims to return to breakeven by 2025, thanks to revenues estimated at 1 billion euros that same year.
The global recorded music market jumped 18.5% last year, more than twice as fast as in previous years, according to the International Federation of the Phonographic Industry (IFPI).
Deezer scrapped plans for an initial public offering in 2015 as a drop in the number of users of internet radio specialist Pandora Media clouded prospects for streaming services. Pandora was later acquired by Sirius XM Holdings in 2018 for $3 billion.
The valuation retained for Deezer is close to that which was attributed to it in 2018 during a fundraising of 160 million euros, or 1 billion dollars. The platform is still in the red and is counting on a return to equilibrium by 2025, thanks to expected revenues of 1 billion euros this same year.
The French faces strong competition from Spotify and major American groups like Apple and Amazon, which have also launched their streaming offers. Last June, Deezer had 2% of the global music streaming market, according to data provider Midia.
Spotify remains the undisputed leader with 31% market share worldwide, followed by Apple Music (15%) and Amazon Music (13%). France is Deezer’s main market, where its market share stands at 29%.
The deal with I2PO will bring Deezer up to 425 million euros to invest in its growth, the two companies said. In 2021, Deezer suffered an operating loss of 120.6 million euros, compared to a loss of 88.3 million euros the previous year. Turnover is expected to increase by 14% this year.
As part of the merger announced on Monday, Iris Knobloch will become chair of the board of Deezer by the end of the year, while Matthieu Pigasse will sit on the board of directors, alongside a representative of Artemis. The merger remains subject to I2PO and Deezer shareholder approval and is expected to be finalized by the end of June.
-Nick Kostov, The Wall Street Journal (French version Thomas Varela)
Agefi-Dow Jones The financial newswire
(END) Dow Jones Newswires
April 18, 2022 14:08 ET (18:08 GMT)