Valued at the closing date, the price of the transaction is approximately $70.6 million, according to RealNetworks, comprising $15m in cash, $11.6m in MelodyVR stock, and assumption by MelodyVR of approximately $44m in payment obligations, primarily “to various music industry entities”.
As noted by MBW last August, MelodyVR, which posted a £15m ($19m) net loss in calendar 2019 on revenues of £195k ($242k), appears to have agreed to cover said payment obligations to record labels, music publishers etc.
According to a release announcing the completion of the sale, RealNetworks, which owned 84% of Rhapsody, was not a direct party to the merger agreement other than as a security holder representative.
In connection with the sale, RealNetworks received $1.5m on repayment of a note and $10m worth of MelodyVR stock in repayment of an outstanding loan; these shares are subject to a 12-month lockup.
RealNetworks also received $5.7m in cash and stock proceeds in liquidation preference based on its preferred stock holdings in Napster.
In addition, $3m will be held in an 18-month indemnity escrow; the residual portion will be paid to RealNetworks after 18 months.
According to RealNetworks, Napster started 2020 with over 3 million users across four continents, delivering over 90 million licensed tracks.
Napster acts as both a consumer-facing platform and a B2B / platform-as-a-service partner to businesses. The platform served 10.8 billion streams in 2019 with annual revenues of $113 million.
“I want to thank the Napster leadership team for all of their great work getting us to this point. Moreover, since we will be an ongoing shareholder in the merged company, we wish MelodyVR great success.”
Rob Glaser, RealNetworks
“We are very pleased with the completion of the sale of Napster to MelodyVR,” said Rob Glaser, Chairman and CEO of RealNetworks.
“The proceeds of the sale strengthen Real’s balance sheet and enable us to focus even more deeply on our primary growth initiatives which consist of two machine learning-based businesses, SAFR and Kontxt, and our GameHouse casual games business.”
Added Glaser: “I want to thank the Napster leadership team for all of their great work getting us to this point. Moreover, since we will be an ongoing shareholder in the merged company, we wish MelodyVR great success.”Music Business Worldwide