October 15, 2015 / 10:00 AM / 3 years ago

Music streaming service Deezer seeks 300 mln euros in flotation

PARIS (Reuters) - Music streaming service Deezer said it aims to raise 300 million euros ($343 million) selling new shares to fund marketing as it chases more subscribers to take on bigger rivals such as Apple and Sweden’s Spotify.

Deezer said it will have a value of between 900 million and 1.1 billion euros following its initial public offering (IPO) later this month.

“The IPO will allow us to accelerate our growth and continue to play a leading role,” Chief Executive Hans-Holger Albrecht said in a statement on Thursday.

Deezer and its rivals represent a shift in the music industry, away from buying and downloading tracks to listening online to songs stored remotely. The company has 6.3 million subscribers who can listen to a catalog of 35 million songs for 9.99 euros a month.

Chief Operating Officer Simon Baldeyrou said the company aimed to raise 300 million euros and would adjust the number of shares sold according to where they were priced within a 36.40 euro to 49.24 euro range.

This would mean selling 8.242 million new shares at the lowest price, or 6.092 million at the highest.

Deezer said it expected net proceeds of about 291 million euros. An over-allotment option to increase the number of shares sold by 15 percent could bring additional gross proceeds of 45 million.

Trading of the shares on the Euronext Paris stock exchange is due to begin on Oct. 30. The offer price will be set on Oct. 27.

Deezer’s largest shareholder with 27 percent is tycoon Len Blavatnik’s Access Industries, while Orange owns 11 percent. Three music labels, Warner Music, Sony Music and Universal Music, part of Vivendi, together own close to 15 percent of the shares.

The share sale will “enable the group to develop and enlarge its subscriber base”, Deezer said, adding that it would invest in marketing and promotions, as well as campaigns with telecom operators and other partners.

Present in 180 countries but with the bulk of its clients in France, some 4.8 million of Deezer’s paying customers get access because the service is bundled with their mobile service from telecom operators like Orange, Vodafone and Deutsche Telekom.

Deezer’s biggest challenges will be competing with Spotify, with its huge lead in the United States, and Apple’s new music streaming service.

BNP Paribas and Bank of America Merrill Lynch are acting as joint global coordinators and joint bookrunners for the IPO. Citigroup and Societe Generale are acting as joint bookrunners.

Reporting by James Regan and Joseph Sotinel; Editing by Ingrid Melander, Andrew Callus and Adrian Croft

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