It was rumored last week – now it’s a done deal.
Streaming company Deezer has reached a definitive agreement to combine its business with I2PO, a Special Purpose Acquisition Company (SPAC) based in France.
As a result, Deezer is to publicly list on the Euronext Paris, seven years after its last attempt at an IPO failed.
On a fully diluted basis, the I2PO merger gives Deezer a pre-money equity valuation of EUR €1.050 billion (USD $1.13bn at current exchange rates).
That valuation corresponds to an enterprise valuation of approximately €1.075 billion ($1.16bn), I2PO confirmed today (April 18).
In that announcement, I2PO called Deezer “the second largest independent music streaming platform in the world”, confirming that the service currently has 9.6 million subscribers globally.
I2PO’s announcement also confirmed that Deezer generated revenue of EUR €400 million in 2021, and stated that the plan for the merger was to be a “catalyst for Deezer’s next stage of growth, with the ambition to achieve €1 billion revenue by 2025, and a clear path to operating profitability and positive cash-flow”.
After the merger is completed, the combined company will benefit from the cash currently held by I2PO, in addition to cash raised through a PIPE (Private Investment in Public Equity).
This PIPE has been subscribed by most of the existing shareholders of Deezer including Access Industries, Universal Music Group, Warner Music Group, Orange, Kingdom Holdings, Eurazeo and Xavier Niel, as well as a group of long-term French and international investors including Groupe Artémis, Bpifrance and Media Participations.
Via the PIPE (and a non-redemption undertaking), a total amount of €135 million ($145m) has been secured to date.
I2PO says this amount meets “the minimum cash condition [needed] to pursue the group’s growth strategy, regardless of final redemption rate”.
I2PO will be renamed Deezer upon completion of the merger.
Iris Knobloch, Chairwoman of the Board of Directors and Chief Executive Officer of I2PO, commented: “With its well-established brand, first-class management team and scalable platform, Deezer is poised to continue to capture a significant share in the booming music streaming growth.
“This is a perfect match and a transformational deal that will deliver long-term value creation for our shareholders as Deezer is a unique asset with considerable strategic avenues for future growth.
“With Deezer’s hybrid B2B/B2C strategy to enter key international markets, its highly competitive technology and focus on ESG, we are confident that the company is well-positioned to disrupt and consolidate while providing a high-quality music streaming service to millions of users around the world.”
“With Deezer’s hybrid B2B/B2C strategy to enter key international markets, its highly competitive technology and focus on ESG, we are confident that the company is well-positioned to disrupt and consolidate while providing a high-quality music streaming service to millions of users around the world.”
Iris Knobloch, I2PO (soon to be renamed Deezer)
François-Henri Pinault, co-founder and Member of the Board of Directors of I2PO, declared: “We launched the first European SPAC dedicated to entertainment and leisure with the ambition to take a European champion to new heights. In Deezer, we have found the ideal combination. I2PO brings an extensive international network and a complementary skill set to help develop Deezer as the leading independent music streaming platform through strong positions in selected key markets. We are excited to accompany one of the emblematic European tech leaders in its next chapter as a public company listed in Paris.”
Matthieu Pigasse, co-founder and Member of the Board of Directors of I2PO, added: “Music is life. It is the only universal language. Where words fail, music speaks. As a longtime investor in the media and entertainment world and a customer of Deezer, I know first-hand that Deezer is the home of music, with the best experience possible and a unique potential. ‘The future is unwritten’ said Joe Strummer (The Clash). With Deezer, we’re going to write together the future of music streaming, with a great team, fantastic tech capabilities, a differentiated business platform and an ability to scale.”
Guillaume d’Hauteville, Chairman of the Board of Deezer, said: “Deezer has been accelerating its momentum substantially over the past months, reaching again double-digit growth in February. With the imminent launch of the RTL+ partnership in Germany, among other developments, the future of Deezer is brighter than ever.
“We chose to go public via a merger with I2PO as this route allowed us to review our future business plans and opportunities with an excellent team, increase our financial means, keep our strategic potential, and provide liquidity to our current and future shareholders.
“I would also like to thank all Deezer employees, its management team and historical shareholders led by Access Industries, for having allowed the company to become what it is today and for continuing to do so with further investments as part of this transaction. In addition, today’s transaction is another landmark for Access Industries as we like to help our music and digital investments, such as Deezer, Spotify, Beats, Warner Music or DAZN, to name a few, grow and become references in their respective markets.”
Jeronimo Folgueira, Chief Executive Officer of Deezer, added: “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.”Music Business Worldwide