Deezer Targets $345 Million in Paris IPO to Take On Spotifyby and
Valuation seen as high as 1.1 billion euros after share sale
Trading on Paris stock exchange scheduled to begin Oct. 30
Deezer SA is seeking at least 300 million euros ($343 million) in a Paris share sale, valuing the music-streaming site at as much as 1.1 billion euros as it tackles Spotify Ltd.’s bigger and better-known service and Apple Inc.’s more recent products.
The initial public offering would value the French company at 900 million euros to 1.1 billion euros after it sells 8.2 million new shares at 36.40 euros to 49.24 euros apiece, it said Thursday. Existing shareholders, including founder Daniel Marhely, Idinvest Partners and French telecommunications tycoon Xavier Niel, may sell stakes through an over-allotment option representing as much as 15 percent of the sale, Deezer said.
“The music market is rebounding after some tough years, and the streaming segment should grow even faster,” Chief Executive Officer Hans-Holger Albrecht said in a conference call. “We’re just at the beginning.”
Started in 2007 by Marhely, who quit school at 16 to work as a developer for Internet startups, Deezer had 6.3 million subscribers at the end of June, according to the IPO filing. The company, whose largest shareholders also include Leonard Blavatnik’s Access Industries, is smaller than Swedish rival Spotify, which has more than 20 million paying subscribers and was said to be valued at $8.5 billion in its most recent financing round.
Deezer now faces intensified competition after Apple introduced its music-streaming offering in June. Albrecht said it hasn’t hurt Deezer so far. If anything, Apple will have a positive effect by helping to develop the streaming market, he said.
“Since the launch of Apple’s service we haven’t seen any kind of impact on our business,” Albrecht said. “Apple doesn’t change things fundamentally. We’re used to tough competition.”
As the competition in music streaming intensifies, companies are branching out into events and merchandising to make their services more appealing to consumers and artists. Last week, Pandora Media Inc., the world’s leading online radio service, paid $450 million for Ticketfly, a ticketing service. Deezer said Thursday it will partner with BandPage Inc. to include concert listings in artist profiles and alert fans to upcoming offers.
“Streaming services are becoming the most powerful places where musicians and fans interact,” J. Sider, CEO of BandPage, said in an interview. “As streaming continues to move forward, we’re using listening data to personalize the experience for you.”
BandPage takes a 10 percent cut of sales that result from its listings and messages, and will share some of that money with Deezer for sales that come from its app, according to Sider.
Deezer has a track record of teaming up with phone companies to sell its premium subscriptions coupled with mobile-phone packages and, since it launched in the U.S. about a year ago after a long hold off, has partnered with speaker makers Sonos Inc. and Bose Corp. Deezer plans to use the IPO money to boost its sales network and increase market share through partnerships.
The subscription period for shares will end Oct. 26 for the French public and the following day for international investors, Deezer said. Trading on the Paris exchange will begin Oct. 30.