7digital To Acquire Top Competitor 24-7 Ent, Raise $3.6 Million
B2B digital music services group 7digital Group Plc (LON:7DIG) is issuing new stock to raise $3.64 million USD (£3mln) as it finalizes negotiations to buy its last major European competitor 24-7 Entertainment AG.
The disclosure came during a report to investors that showed overall revenues up 15% to £11.9m after currency gains. The company predicted a loss per share of 6 cents (4.53 pence) per share. The company's overall loss for the period was $6.3 million (£5.2m) down from $9.6 million (£7.9m) in 2015.
CEO Simon Cole called it a “major inflection point” for the company. “The digital music ecosystem is developing as we had expected and I am particularly pleased that we can now count all three major record labels as our customers,” he said.
Even as the streaming music market overall is heating up, consolidation has accelerated in the digital white label and b2b sector. Telcos, which once used providers like 7digital to launch their own music services, now often prefer to onboard existing market leaders like Spotify, Napster and Deezer or to partner, as Sprint has with its major investment in Tidal.
7digital's strategy includes both diversification and leading moves to consolidate. "We are also using our position in the industry to consolidate," said Cole. "Having successfully integrated last year's acquisition of Snowite in France, we are seeking to acquire 24-7 based in Berlin and Copenhagen and with that acquisition add MediaMarktSaturn, Europe's largest retailer of consumer electronics, to our customer base. The acquisition would materially enhance the Group's recurring revenue streams."