Songtradr Inc has launched an agreed bid for AIM-quoted music streaming technology developer 7digital Group (LON: 7DIG) and the 0.695p a share offer values the company at £19.4m. The share price has not been at this level since September 2021.
Songtradr is a music licensing company with a platform and technology that connects music rights holders to brands and content creators. Combining the businesses will simplify licensing and potentially accelerate growth. Video games and other digital demand for music is expanding.
Songtradr has raised more than $100m and it has the financial clout and scale to take full advantage of the 7digital technology. In September 2020, 7digital raised £6m at 2.25p a share and that cash has been used up. Previous fundraisings have been done at much higher share prices.
In the six months to June 2022, revenues grew by 21% to £3.9m, with licensing revenues jumping to £2.5m. The company is still losing money but moving towards breakeven. Cash was running out and a £500,000 loan was obtained from 27.3% shareholder Magic Investments, taking the total owed to £1m.
Songtradr will pay back the Magic Investments loan and a £2m loan facility from Investec.
7digital has a radio production business and it is unclear if this will fit in with the enlarged group strategy. It was generating cash for 7digital.