Music streaming

Deezer’s SPAC places a $1.1 billion valuation on the French music streaming service

Deezer goes public via a SPAC deal valuing the music streaming service at 1.05 billion euros, or about $1.1 billion.

Why is this important: Deezer owns just 2% of the global music streaming business and is not profitable, but the hope is that this SPAC deal will drive the company’s growth and generate profits.

Details: Deezer will merge with blank check company I2PO, which is backed by the French billionaire Pinault family and Centerview Partners banker Matthieu Pigasse, The Wall Street Journal first reported. It is run by former WarnerMedia executive Iris Knobloch.

  • Deezer has 9.6 million paying subscribers, which pales in comparison to Spotify’s 180 million.
  • Deezer generated revenue of 400 million euros ($431.7 million) last year, but its operating loss was 102.6 million euros ($110.7 million), per WSJ .
  • The SPAC deal will give him up to 425 million euros ($458.7 million). The service said it plans to reach 1 billion euros in revenue ($1.1 billion) and be profitable by 2025.
  • Deezer said most of its existing shareholders will remain invested, including Kingdom Holding Co. and Access Industries. Other investors are Universal Music Group, Sony Group Corp. and the French telecommunications company Orange.
  • The transaction is expected to close by the end of June.

Rollback: Deezer attempted to go public in 2015 but scrapped the plan, blaming market conditions. Pandora, another music streaming service, was malfunctioning at the time.

  • Deezer then raised Series E and Series F rounds of funding. The €160 million ($172.7 million) Series F funding round in 2018 valued the company at €1 billion (1 .1 billion dollars).

The bottom line: “The transaction is the latest indication of investors’ appetite for music, which has plummeted in recent years, boosted by streaming.” — Nick Kostov, WSJ

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