Spotify Rival Deezer Strikes SPAC Deal Valuing It at About $1.1 Billion

PARIS—French music streaming service Deezer is merging with a special-purpose acquisition company and aiming to go public at a €1.05 billion, or about $1.13 billion, valuation, the companies said.

The Paris-based competitor to Spotify Technology SA

and other music streamers have 9.6 million subscribers and generated revenue of €400 million in 2021, Deezer said in a statement. The music streaming service offers listeners a catalog of more than 90 million songs, as well as podcasts, audio books and radio channels.

Founded in 2007, Deezer is merging with Paris-listed I2PO SA

. The firm is a so-called blank-check company backed by France’s Pinault family, the controlling shareholder of Gucci-owner Kering, as well as Centerview Partners banker Matthieu Pigasse. The vehicle is headed by former Warner Media executive Iris Knobloch.

The Wall Street Journal reported last week that both sides were nearing a deal.

The transaction is the latest indication of investor appetite for music, which has been on a tear in recent years, boosted by streaming. Overall, the global recorded music industry’s revenue grew by 18.5% last year—more than double the average rate of the preceding four years, data from the International Federation of the Phonographic Industry show.

Major music labels that license songs to streaming platforms have also tried to cash in on the popularity of streaming in recent years. Warner Music floated in 2020, and Universal Music Group NV went public last year.

Deezer has had mixed success capitalizing on the boom. The company previously abandoned plans for an initial public offering in 2015, after a drop in active listeners at internet radio operator Pandora Media Inc. triggered concerns about the outlook for streaming services. Pandora was subsequently acquired in 2018 by Sirius XM Holdings inc.

for $3 billion.

Other Deezer investors include French telco operator Orange SA.


Angel Garcia/Bloomberg News

Deezer’s SPAC deal valuation also isn’t much higher than what investors valued Deezer back in 2018, when it raised €160 million, valuing it at €1 billion. Among the biggest challenges facing Deezer is stiff competition from Spotify, as well as Apple Inc.’s

Apple Music and inc.

At the end of June last year, Deezer had about 2% share of the global music streaming market measured by subscribers, according to Midia, a data provider. Spotify led the way with a 31% share, followed by 15% for Apple Music and 13% for Amazon Music.

Deezer’s two largest markets are France, where it has a 29% market share, and Brazil, where it has 17% of the market. The French tech firm typically strikes partnerships with media or telecoms groups to enter new markets, and is having discussions about expanding in the US, Ms. Knobloch said.

Deezer signed a strategic partnership with broadcaster RTL Deutschland in November that will allow it to expand in Germany.

“What we’re trying to do with our partners is replicate the Apple and Amazon strategy, but we bring the music product and they bring the user base, so together we can replicate that model,” said Jeronimo Folgueira, Deezer’s chief executive. “We need to compete against them and our partners need to compete against them, and together we can compete better.”

Private companies are flooding to special-purpose acquisition companies, or SPACs, to bypass the traditional IPO process and gain a public listing. WSJ explains why some critics say investing in these so-called blank-check companies isn’t worth the risk. Illustration: Zoë Soriano/WSJ

In a statement, Deezer said that most of its existing shareholders will remain invested in the company, including Kingdom Holding Co., which is controlled by Saudi Arabian billionaire Prince al-Waleed bin Talal, and Access Industries, the industrial conglomerate founded by billionaire Len Blavatnik that controls Warner Music Group Corp. Other Deezer investors include Universal Music Group, Sony Group Corp.

and French telco operator Orange SA


The deal with I2PO will give Deezer up to €425 million to invest in growth, according to the companies. Deezer, which has yet to turn a profit, is aiming to reach €1 billion revenue by 2025 and be profitable by that same year. Deezer’s 2021 operating loss was €120.6 million, compared with an operating loss of €88.3 million the previous year. The company is aiming to generate revenue of approximately €455 million by 2022, a 14% rise on last year.

Ms. Knobloch will become chairman of Deezer by the end of the year, while Mr. Pigasse will sit on its board along with a representative of Artemis,

the Pinault family holding company that controls Kering. The deal, which is subject to the approval of I2PO and Deezer shareholders, is expected to be completed by the end of June.

Write to Nick Kostov at

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