Shareholders Question Jay Z $56 Million Streaming Deal

Not So Fast! Shareholders Question Jay Z’s $56 Million Deal To Acquire Streaming Service Aspiro

[J]ust recently, news broke that rapper/entrepreneur Jay Z was purchasing a Swedish streaming music company Aspiro for $56 million.

The deal would give Jay Z’s new company Project Panther control of the corporation, which produces TIDAL app.

If all goes according to plan, TIDAL will be positioned to contend with other streaming services, with additional offerings such as videos and other curated content.

That is if the transaction goes through.

Aspiro’s principal shareholder Streaming Media AS has agreed to sell their 75.9 percent majority stake in Aspiro to Project Panther.

However, some remaining shareholders have raised questions about the deal, leading an Independent Bid Committee to disclose more information about the future of Aspiro.

According to the Independent Bid Committee, which is analyzing Aspiro’s sale, the company is in need of cash and does not have enough capital to operate beyond the next 12 months.

“The Company is not fully funded for the coming twelve months. The board of directors is considering various funding alternatives,” the Independent Bid Committee explained to shareholders. “The board of directors further notes that a change of ownership of the Company, inter alia by way of a completion of the public bid from Panther, could give rise to new funding opportunities for the Company.”

The matter of raising funds is crucial to Aspiro’s plans for the worldwide expansion of TIDAL, which currently has a library of over 25 million songs and 75,000 videos.

Jay Z’s firm must see the long-term potential of the company because it is not turning a profit.

For Aspiro, this means that the corporation has hit a ceiling for its global expansion plans.

Drawing new users to the TIDAL service will require money the company does not have, thus stifling its ability to compete against well-funded rivals like Deezer,Rdio and Spotify.

To put these numbers in context, Deezer has raised $149 million; Rdio has raised $125 million while Spotify has raised $537 million.

The Independent Bid Committee believes that Jay Z’s $56 million cash infusion is the solution, in terms of prospects for Aspiro’s long-term growth.

The agreement would also help later rounds of funding for the publicly traded Swedish company.

“Taking Aspiro’s streaming services to the next level requires a dedicated owner with relevant experience and knowledge as the streaming market is highly competitive and evolves rapidly,” the Independent Bid Committee explained to shareholders.

According to documents, Jay Z intends to keep Aspiro’s current executive team, which includes Andy Chen, former VP of MTV Networks Europe and Viacom International.

Chen also worked for Interscope Records, promoting early records for Eminem, Black Eyed Peas, and others.

Jay Z’s arrangement to acquire Aspiro is supposed to be closed by March 18 if all regulatory hurdles are cleared.