Big things are afoot at British digital music firm 7digital, which says it has entered “reverse takeover” discussions with radio group UBC Media after the latter company provided it with funding.
According to a financial release by UBC Media this morning, the company has “entered into a Letter of Intent in relation to the proposed acquisition of 7digital Group” while lending the company £1m as a convertible loan note.
The companies are aiming to agree terms of the acquisition by 16 December, with a view to completing the deal by the end of April 2014.
“I’m very happy that we are able to help 7digital’s impressive expansion and that we have agreed to try and make our two companies one,” said UBC boss Simon Cole in a statement.
His publicly-listed company produces radio shows for the BBC and commercial stations alike, while its software division Unique Interactive focuses on digital radio text and data. It is also the largest shareholder in audio startup Audioboo. UBC also released its latest financial results today, revealing that revenues fell 30% year-on-year to £1.5m in the first half of 2013, when the company recorded a £620k loss.
“The union of content and technology skills created by the potential merger of UBC and 7digital, would create a company with genuine global scale. The combined strengths give access to both the customers and content needed to drive business in the digital age,”
7digital says that traffic to its “global platform” – that includes stores and services it runs for partners as well as its own – have increased by 225% in the last six months to more than 1bn requests a month.
The UBC announcement notes that the combined companies would have nearly 5m registered users, and have services preloaded on 50m mobile devices. 7digital confirmed this morning that it’s powering retailer HMV’s new digital music services in the UK and Ireland, as well as working with hardware firm Pure on their Jongo launch in the US. Other clients include Samsung, BlackBerry, T-Mobile and McDonalds.
“We will continue to develop and scale the platform, and to innovate with new products and features. Radio, in particular, is an area where we see a lot of future opportunities, and we are thrilled that our new strategic investor and partner, UBC, shares this vision,” said CEO Ben Drury.
7digital’s last public financial results revealed revenues of just under £8m and a net loss of £113k in 2011. The company was due to file its 2012 results with Companies House in the UK by 30 September, but is overdue. UBC’s announcement of the reverse takeover talks claims that “7digital’s revenue last year was over £11m”.