French music streaming company Deezer SA is set to go public via a merger with a special-purpose acquisition company in a $1.13 billion deal.
The Wall Street Journal reported today that the SPAC deal will see Deezer merge with Paris-listed I2PO SA. The company is a blank check company backed by the Pinault family, majority shareholders of Gucci’s parent company, Kering SA, and Centerview Partners Holdings LP banker Matthieu Pigasse. I2PO is led by former WarnerMedia LLC executive Iris Knobloch.
Founded in 2006, Deezer, although little known in North America, is a competitor to Spotify Technology SA. The company has 9.6 million paid subscribers and generated €400 million ($431 million) in revenue in 2021. In comparison, Spotify had 180 million paid subscribers at the end of 2021, with revenue of $3.04 billion.
Deezer has a music catalog of over 90 million songs and also offers podcasts, audiobooks and radio channels. The company was rumored to be looking to go public in 2015, but no deal was reached. Variety noted that Deezer’s decision not to go public that year was the result of a sharp drop in Pandora radio listenership, indicating a declining market for streaming services.
Deezer has a 29% market share in France and 17% in Brazil. Overall, Deezer only has a 2% market share compared to 31% for Spotify, 15% for Apple Music and 13% for Amazon Music. Deezer promotes its service through partnerships with media or telecom groups to penetrate new markets.
“What we’re trying to do with our partners is to replicate the strategy of Apple and Amazon, but we bring the music product and they bring the user base, so together we can replicate that model. “, said Jeronimo Folgueira, CEO of Deezer. the newspaper. “We have to compete with them and our partners have to compete with them, and together we can compete better.”
Once the SPAC merger is complete, Deezer will have 425 million euros ($458 million) to invest in its growth. At the time of closing the deal, Deezer had never been profitable and had recorded a loss of 120.6 million euros ($130 million) in 2021 and 88.3 million euros ($95 million ) the previous year.
Deezer has raised $531.8 million in venture funding, according to Crunchbase. Investors include Orange, Kingdom Holding Company, Access Industries, Idinvest Partners and CM-CIC Capital.