Deezer Confirms SPAC Merger, Plans to Generate €1 Billion During 2025

(PRNewsFoto/Deezer)

Five days back, reports suggested that French streaming service Deezer was preparing to go public as part of a special purpose acquisition company (SPAC) merger. Now, the Access Industries subsidiary has officially unveiled the corresponding “definitive agreement.”

Deezer today confirmed its SPAC-powered plans to begin trading on the public market. In a contrast to last week’s disjointed rumblings of an imminent merger – a representative for the 15-year-old streaming platform told DMN that he wouldn’t “make any comments” on the topic – the transaction’s formal announcement came to light in a prospectus posted on the Euronext website.

Of course, the company that Deezer’s poised to merge with, I2PO SA, is already listed on the Euronext Paris. I2PO set out to invest in businesses “with principal operations in the entertainment and leisure economy in Europe and abroad with a dedicated focus on digital” in July of 2021.

The SPAC’s backers include Artemis, the holding company of French billionaire François Pinault, who founded Gucci owner Kering nearly six decades ago. Meanwhile, former WarnerMedia exec Iris Knobloch serves as I2PO’s CEO.

According to the merger announcement from I2PO and Deezer, the obscure music streaming platform has 9.6 million subscribers (of some 16 million monthly active users).

Within these 9.6 million premium accounts, 5.6 million are described by higher-ups as “direct,” with 3.9 million “indirect” accounts “that have access to Deezer’s service through a distribution partner.” Interestingly, Paris-headquartered Deezer at 2021’s end had 4.2 million subscribers in France and 2.7 million subscribers in Brazil – noteworthy stats generally and with regard to the fact that the service is available in over 180 nations.

The transaction will place Deezer’s “pre-money equity value” at $1.13 billion (€1.05 billion), the companies disclosed, with an “enterprise value” of $1.16 billion (€1.075 billion). Moreover, Deezer generated $431.30 million (€400 million) in 2021, per the document, up about 5.5 percent from 2020’s $408.85 million (€379.2 million).

However, Deezer’s 2021 operating loss came in at $130.04 million (€120.6 million), according to the breakdown, and the post-merger company intends to pull down an estimated $490.29/€455 million for 2022, $603.43 million/€560 million for 2023, and $1.08 billion/€1 billion for 2025, the text shows.

On this front, the involved parties also pointed to “I2PO’s international network with media and entertainment companies in the key target countries” and the purported “strategic competitive advantage” thereof for post-merger Deezer. Additionally, “I2PO will provide invaluable input to increase marketing efficiency and brand impact,” the prospectus claims.

The merger’s completion is tentatively expected to arrive in early July, and Deezer’s CEO, Jeronimo Folgueira, is set to lead the post-deal streaming service. In terms of operating capital, I2PO possesses “a dedicated deposit account” containing $296.59 million (€275 million) and plans to roll out up to 15 million new shares priced at $10.79 (€10) apiece.

Among this PIPE’s investors are “most of the existing shareholders of Deezer including Access Industries, UMG, Warner Music, Orange, Kingdom Holdings, Eurazeo and Xavier Niel,” the businesses communicated.