7digital is planning a reverse takeover of UBC Media Group.
The takeover of the publicly traded UBC would allow 7digital to go public without going through an IPO. The two companies have signed a letter of intent, and terms of the acquisition will be finalized by December 16th. The parties intend to close the agreement by April 30th of next year.
UBC also lent a £1m ($1.6m) convertible loan to 7digital; the money will be used to expand their streaming and radio services platform.
So who are these companies?
7digital provides companies with a “scalable” music technology platform, they also take care of the music rights. For example, 7digital is behind HMV’s recent online and mobile music services, and the new Pure Connect music streaming service. They also directly sell music to consumers on the web and mobile apps.
UBC creates multimedia content for the BBC and 250 UK commercial radio stations. They are also responsible for the software behind the UK Radioplayer and are Audioboo‘s largest shareholder.
UBC said the deal would create a company that operates in 42 countries, with almost 5 million registered users, and with services pre-loaded on 60 million mobile devices. The new company would also produce 1,200 hours of content a year “and have a licensed catalogue of 25 million music tracks and audiobooks”.
UBC’s yearly revenue was most recently down 30 percent to £1.53m ($2.47m). 7digital’s revenue was over £11m ($17.8m) in 2012, up from £3m ($4.8m) in 2009.