TIDMMVR
RNS Number : 0695X
MelodyVR Group PLC
25 August 2020
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ANNOUNCEMENT
MelodyVR Group PLC
('MVR' or the 'Company')
Acquisition of Rhapsody International, Inc.
MelodyVR Group (AIM: MVR), one of the leading creators of
virtual reality content, is pleased to announce that it has entered
in to an agreement and plan of merger with Rhapsody International
Inc., a Delaware corporation trading as Napster ("Napster") (the
"Merger Agreement") in connection with the acquisition of Napster
(the "Acquisition").
The Acquisition is classified as a reverse takeover pursuant to
AIM Rule 14 and as such the Company's shares have been suspended
pending publication of an Admission Document, anticipated to take
place by the end of November 2020. The Acquisition is subject to
approval by MelodyVR's shareholders at a General Meeting.
Under the terms of the Merger Agreement, a wholly-owned
subsidiary of the Company will be merged with and into Napster
(with Napster being the surviving entity) (the "Merger"). The
Company will pay consideration totalling approximately $26.3
million to the vendors of Napster to be satisfied in aggregate by
$15.0 million in cash, and the issuance of approximately 200
million MelodyVR shares. Upon completion of the Merger, Napster
will be a wholly-owned subsidiary of the Company.
Strategic rationale
The Company, which operates the MelodyVR platform, believes that
the addition of Napster's music library, comprising in excess of 80
million music tracks, to its own platform of VR music performances
and live streamed events will provide a compelling and
differentiated offering to music fans around the world. As
previously stated, the Company's strategy is to scale the business
through a subscription model, implementing a monthly fee similar to
other subscription-based companies operating in the entertainment
sector. Napster is an established music streaming business with
corporate and consumer subscribers across Europe, North America,
Latin America and the Asia Pacific region. The investment case for
the acquisition of Napster can be summarised by:
-- Differentiation - The creation of a differentiated music
offering combining traditional music streaming and immersive
content which is unique compared to other music services, including
those of existing major streaming providers such as Apple Music and
Spotify.
-- Increased annuity income - Napster is a business with high
quality, annuity-based subscription earnings.
-- Convergence - Compelling offering with opportunity for
operational synergies and combined OPEX reduction across enlarged
MelodyVR Group.
-- Expansion - Opportunity for acceleration of scale and the
delivery of MelodyVR's strategic objectives.
The music streaming market is fast growing and generated
revenues of $11.4 billion in 2019.
Napster
Napster is a pioneer in digital music and a leading provider of
music streaming technologies and services for businesses, operating
in four continents and 34 countries with a premium subscription
service giving millions of consumers unlimited ad-free access to
music on any device - online or offline. Napster combines the
iconic history of one of the most recognizable music brands in the
world with the vast experience and technological platform of the
industry's first subscription streaming service provider.
'Powered by Napster' is a complete music and audio platform
service that makes it possible for companies to launch their own
branded music and audio service. Customers include BMW (BMW Music),
SFR France (telecom), Sonos (Sonos Radio), Sony Music Entertainment
Japan (Mora Qualitas), Telefonica (Vivo Musica), Univision (Uforia)
and more. The platform service offers companies a suite of
technologies and solutions, including music and media streaming and
download infrastructure, applications, rights management, customer
billing, royalty administration and business intelligence. In the
year to 31 December 2019 Napster reported revenues of $112.6m and
made a profit before interest and tax of $1.8m.
Napster is headquartered in Seattle, with offices in the U.S.,
Europe, Asia, and Latin America and is majority owned and
controlled by Real networks Inc, a Company listing on NASDAQ.
Follow @Napster on LinkedIn, Twitter, Facebook and Instagram and
learn more at www.napster.com
Details of the Merger Agreement
The Company will advance an initial $6.0m deposit which will be
placed into escrow, followed by an additional $6.0m deposit which
is expected to be advanced shortly thereafter and upon satisfaction
of certain post-signing conditions. Ahead of completion, Napster
may request funds to be released from the deposit in order to pay
certain identified rights holder obligations. Any such requests
must be approved by the Company. In the event that the Merger fails
to complete due to Napster being unable to meet the closing
conditions of the Merger, the deposit will be refunded to the
Company and Napster must repay any advances to the Company within
six months of completion. In the event that the Company fails to
fulfil certain closing obligations under the Merger agreement, the
Deposit may be forfeited. At completion of the Merger, the deposit
will be released to certain of Napster's debt-holders and
shareholders, and a further USD$3.0m will be deposited by the
Company into an escrow account. This amount will be used to secure
certain indemnity obligations of Napster's shareholders and unless
used pursuant to those indemnity obligations, will be released to
the former Napster shareholders 18 months after closing. As further
consideration for the Merger, the Company will issue approximately
200 million ordinary shares of the Company to Napster's
debt-holders and shareholders at completion, such amount shall be
adjusted for any decline in the Company's share price prior to
completion.
CEO of MelodyVR Anthony Matchett said:
"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. 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. 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."
MelodyVR's purchase of Napster reflects a concerted effort to
provide incredible music in all its forms to music lovers around
the world, who want to watch live performances, see the latest
visual content, and listen to recordings, and to musicians, who
want simpler, better connections to their audiences, and an
opportunity to show all sides of their artistry, in a way which
truly does their music justice.
Whether home or away, on smartphone or VR device, music lovers
and music makers can look forward to a next generation music
experience, which is seamless and all-embracing."
For further information please contact:
MelodyVR Group PLC
Anthony Matchett , Executive Chairman and https://melodyvr.com
CEO
Arden Partners plc: Nominated Adviser and Tel: +44 (0) 20 7614
Broker 5900
Corporate Broking: Simon Johnson
Corporate Finance: Ciaran Walsh / Ruari McGirr
/ Paul Shackleton
Notes to Editors:
MelodyVR Ltd ("MelodyVR " ) is a wholly owned subsidiary of
MelodyVR Group PLC, a company that is listed on the AIM market of
the London Stock Exchange under the ticker MVR.L. MVR, a creator of
virtual reality content, joined AIM on 16 May 2016 following a
reverse takeover of Armstrong Ventures plc. Further information can
be viewed at www.melodyvr.com.
Prior to its publication, certain information contained within
this announcement was deemed to constitute inside information for
the purposes of Article 7 of EU Regulation 596/2014 ("MAR"). In
addition, market soundings (as defined in MAR) were taken in
respect of the Acquisition with the result that certain persons
became aware of inside information (as defined in MAR), as
permitted by MAR. This inside information is set out in this
announcement and such information is now considered to be in the
public domain. Accordingly, those persons that received inside
information in a market sounding are no longer in possession of
such inside information relating to the Company and its
securities.
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END
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