MelodyVR buys US music business Napster for $70m
UK-based virtual reality music company has unveiled to investors that it has bought US music streaming business Napster in a deal worth $70m.
Spotify rival Napster is an established music streaming business with corporate and consumer subscribers in Europe, North America, Latin America and the Asia Pacific region.
Napster reported revenues of $112.6m in 2019 and profit before interest and tax of $1.8m.
The MelodyVR platform operator believes the addition of Napster's music library, which comprises in excess of 80 million music tracks, to its own platform of VR performances will provide ‘a compelling and differentiated offering to music fans around the world.’
Melody VR and Napster will initially operate as independent businesses with the goal of combining their two offerings in the future. CEO of MelodyVR, Anthony Matchett said:
Shares in MelodyVR Group closed at 4.3p yesterday and subsequently suspended following the announcement this morning.
For music fans today, live and recorded music are intrinsically linked. We are as keen to see our favourite artists perform live as we are to listen to their albums.”
The deal forms part of the group’s plans to scale the business through a subscription model with a monthly fee like other subscription-based companies in the entertainment sector.
“Our purchase of Napster, one of the music industry's original disruptors, is born out of our wish to deliver the world's foremost music experience, available seamlessly across audio and visual media and in turn presenting a truly next generation music service,” said Matchett.
"MelodyVR's acquisition of Napster will result in the development of the first ever music entertainment platform which combines immersive visual content and music streaming”.
Commenting on the acquisition, Napster’s Chief Executive Bill Patrizio said, “This is a tremendous outcome for two organisations with complementary platforms and loyal audiences, and we could not be more excited to be moving forward as one company.
The product, technology and cultural synergies of Napster and Melody VR will bring tremendous innovation for music lovers, artists and the entire music industry.”
The MelodyVR acquisition is expected to close in the fourth quarter of 2020.
Under the terms of the agreement with Napster, MelodyVR is required to advance $12m by way of a deposit that will be placed into escrow a deposit of US$3m into an escrow account.
As a result, in a separate announcement this morning, MelodyVR announced that it had raised around $15.4m (£11.7m) at a price of 3.5 pence per share to fund both sums.
MelodyVR now plans to undertake another raise by way of a placing in order to both integrate and fund the development and working capital of the enlarged group.
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