LONDON (Alliance News) - 7digital Group PLC said Wednesday it has signed heads of terms for its proposed acquisition of French digital music streaming provider Snowite SAS.
Under the proposed acquisition it will issue 7.3 million shares as a consideration. Shares in the company closed at 6.55 pence Tuesday, and 7digital said that based on its closing mid-market share price prior to announcing the acquisition, the transaction is valued at around GBP485,000.
This will represent an around 6.34% stake in the company's enlarged issued share capital.
Snowite is currently in "Procédure de Sauvegarde" under French insolvency law, and the acquisition will be subject to a decision by the French Commercial Court. Following the signing of heads of terms, 7digital has begun a process to agree a repayment schedule of Snowite's outstanding debt, expected to be EUR1.8 million.
7digital expects the acquisition to increase its turnover by at least GBP1.2 million on a yearly basis, and brings with it "major French retail clients",as well as a strong sales pipeline in French-speaking markets.
The acquisition will add to earnings after an integration period, and will produce overhead synergies of more than GBP500,000 per year from 2017, 7digital said.
"This transaction represents an example of the consolidation which we have always anticipated in the market for B2B supply of digital music and radio services globally; we have positioned 7digital to be ready for this. Assuming we achieve the Court debt repayment schedule that we anticipate, the acquisition of Snowite gives us important new recurring revenues, an accelerated move to profitability and creates shareholder value on advantageous terms," said 7digital Chief Executive Officer Simon Cole in a statement.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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