Deezer's SPAC values music streaming service at $1.1B

Deezer is going public via a SPAC deal valuing the music streaming service at €1.05 billion, or about $1.1 billion.

Why it matters: Deezer owns just 2% of the global music streaming business and is unprofitable, but the hope is this SPAC deal will drive the company's growth and turn a profit.

Details: Deezer will merge with blank-check company I2PO, which is backed by France's billionaire Pinault family and Centerview Partners banker Matthieu Pigasse, Wall Street Journal first reported. It's led by former WarnerMedia executive Iris Knobloch.

• Deezer has 9.6 million paid subscribers, which pales in comparison to Spotify's 180 million.
• Deezer generated revenue of €400 million ($431.7 million) last year, but its operating loss was €102.6 million ($110.7 million), per WSJ.
• The SPAC deal will give it up to €425 million ($458.7 million). The service said it plans to reach €1 billion revenue ($1.1 billion) and be profitable by 2025.
• Deezer said most of its existing shareholders will remain invested, which include Kingdom Holding Co. and Access Industries. Other investors are Universal Music Group, Sony Group Corp. and French telco Orange.
• The deal is expected to be completed by the end of June.

Flashback: Deezer tried to go public in 2015 but abandoned the plan, blaming market conditions. Pandora, another music streaming service, had been performing poorly at the time.

• Deezer then raised Series E and Series F funding rounds. The Series F round of €160 million ($172.7 million) in 2018 valued the company at €1 billion ($1.1 billion).

The bottom line: "The transaction is the latest indication of investor appetite for music, which has been on a tear in recent years, boosted by streaming." — Nick Kostov, WSJ