Deezer, the France-headquartered online audio streaming service backed by corporates Access Industries, Orange, Rotana, ProSiebenSat.1, Universal Music Group (UMG), Sony and EMI, agreed on Monday to list through a reverse takeover.
The company is set to join forces with I2PO, a special purpose acquisition company that floated on the Euronext Paris market in July 2021, in a deal valuing it at €1.05bn ($1.13bn) pre-money.
The transaction will be boosted by approximately $146m in private investment in public equity (PIPE) financing from investors including conglomerate Access Industries and its Warner Music subsidiary, fellow record company UMG, publisher Media Participations and telecommunications firm Orange.
Diversified holding company Kingdom Holdings, Eurazeo, Groupe Artémis, BPIfrance and Xavier Niel also contributed to the PIPE.
Deezer runs an online platform which allows users to stream music and audio content such as podcasts through a freemium model. It had 9.6 million paying subscribers as of the end of 2021, a year when it generated $453m in revenue but made a net loss of nearly $140m.
The majority of the company’s user base are still located in France, but it recently formed a partnership with German mass media group RTL Interactive following similar deals with Orange in 2010 and Brazilian telecoms network operator TIM Celular six years later.
The transaction is not Deezer’s first attempt to secure a public listing. It filed to raise approximately $343m in an initial public offering in 2015, only to retreat shortly afterwards due to unfavourable market conditions. Access Industries was its largest investor at the time of the attempted IPO, with a 36.7% stake, followed by Orange with 14.6%.
However, the timing of the reverse merger may be questionable given the recent share performance of Deezer’s biggest rival, Spotify, which has seen its share price fall by more than half in the past six months after a coronavirus pandemic-fuelled spike in 2020 and early 2021.
Jeronimo Folgueira, Deezer’s CEO, said: “Today marks an important milestone in Deezer’s history as we embark on a journey to become a publicly traded company on Euronext Paris. I am thrilled to partner with I2PO who will provide us with the expertise, the global network and the capital we need to execute our strategic plan.
“We are uniquely positioned on the growing music streaming industry, with a very competitive product, a clear strategy and an experienced and renewed management team to seize this opportunity and create substantial shareholder value.”
Deezer’s total funding stood at about $445m as of an $185m round in 2018 featuring Access Industries, Orange, Kingdom Holding, entertainment producer Rotana Group and private equity firm LBO France that was closed at a $1.16bn valuation.
Access Industries had led a $110m round for the company in 2016 that also featured Orange, a deal that came in the wake of roughly $130m from Access Industries and venture capital firm Idinvest four years earlier.
DC Music and CM-CIC Capital Privé were both earlier investors in Deezer while Warner, UMG, fellow record companies Sony and EMI and media group ProSiebenSat1 had signed agreements to take additional shares when Deezer goes public.
Image courtesy of Deezer.
