French unicorn and Spotify rival Deezer goes public via SPAC deal; shares drop 35% on debut

Paris-based Deezer, a global music streaming service, announced on Tuesday that it has successfully obtained a public market listing on the Euronext Paris stock exchange after combining its business with I2PO, a Special Purpose Acquisition Company (SPAC) based in France.

The I2PO merger has given Deezer a pre-money equity valuation of just over €1B. 

Jeronimo Folgueira, CEO of Deezer, says, “Through merging with I2PO and going public, we have created a solid foundation to execute our strategic plan, with the right capital, expertise, and network. With a highly competitive product, a clear strategy, and a renewed and experienced management team, we will make the most of this opportunity to create substantial shareholder value.”

A decline in the value of shares

According to Reuters, Deezer suffered a sharp decline in the value of its shares on the first day of trading, as it plunged as much as 35 per cent. The company’s shares opened at €8.50 but fell to €7.950 by 07:39 am GMT. Deezer was down 24 per cent at 11:49 GMT at €6.52 per share.

According to Deezer’s investor relations site, as of July 5, 2022, Access Industries owns 38.06 per cent of the company’s share capital with 44,753,926 ordinary shares, while telecoms giant Orange Participations S.A. owns the second largest, with 9,561,723 ordinary shares, or 8.13 per cent of the firm’s share capital.

About Deezer

Founded in 2007 by Daniel Marhely, Deezer is a global provider of music streaming services with a catalogue of more than 90 million tracks. It provides subscribers with access to music, as well as live radio, podcasts, and audiobooks. The company’s users can stream audio content on various devices in more than 180 countries.

Deezer also claims to have become one of the earliest French unicorns and the second largest independent music streaming platform globally. The company has a team of over 600 people based in France, Germany, the UK, Brazil, and the US. 

Capital utilisation

With the merger deal, Deezer received new funding totalling €143M. The capital came from funds held by I2PO and funds raised through a PIPE, which were purchased by the majority of Deezer’s current shareholders, including Access Industries, UMG, Warner Music, Orange, Kingdom Holding, Eurazeo, and Xavier Niel, as well as a select group of long-term French and foreign investors, such as Groupe Artémis, Bpifrance, and Médi.

Through its corporate merger with I2PO, Deezer plans to expand further, concentrating on product innovation and brand distinction as the home of music, uniting fans and artists all over the world, and targeting its efforts towards big appealing markets through its partnership-first approach.

Guillaume d’Hauteville, Chairman of the Board of Directors of Deezer, says, “With those additional financial resources, Deezer, while keeping its capital efficiency, intends to accelerate its innovation leadership and focus on delivering the best streaming product to our clients and partners. Deezer’s positioning as an independent innovator promoting third-party audio content and music in an expanding market makes us very optimistic for its future.”

“Europe’s first SPAC dedicated to entertainment and leisure”

I2PO is a Special Purpose Acquisition Company (SPAC) addressing the entertainment and leisure industry in Europe, the UK and Israel. Capitalising on the deep sector/industry knowledge, deal sourcing and execution capabilities of its founders, I2PO focuses on sub-sectors, including steaming & distribution, music, media IP & services, gaming & esports, e-learning, and leisure platforms. 

As the first female-led European SPAC with Iris Knobloch serving as Chairwoman and CEO, I2PO also focuses on companies having special attention to ESG principles.

Iris Knobloch, says, “We launched I2PO, the first European SPAC dedicated to entertainment and leisure, with the ambition to take a European champion to new heights. In Deezer, we have found the ideal combination as its new management team has positioned the company extremely well to capture a significant share in the booming music streaming growth with its well-established brand, outstanding tech capabilities, and scalable platform. While Deezer enters a hugely exciting expansion phase and its listing is a formidable achievement, today also marks the beginning of a new phase of profitable growth paired with a focus on delivering long-term shareholder value as a publicly-traded company.”

As of today, I2PO will encompass the activities and business of Deezer.