7digital completes purchase of Snowite

Music and radio services firm 7digital announced on Friday it had completed the acquisition of French digital streaming service provider Snowite, originally announced on 6 January.

The AIM-traded company negotiated a slight reduction in the amount of existing debt of Snowite with the French Commercial Courts, from €1.8m to €1.7m, as part of its Procédure de Sauvegarde under French insolvency law, which is comparable to Chapter 11 bankruptcy in the United States.

It also fixed the term of repayment to eight years after a one year moratorium, payable in equal installments with no interest.

The acquisition was expected to increase 7digital’s turnover by at least £1.2m on an annualised basis, with Snowite bringing annualised monthly recurring revenues of £864,000.

It also brought major French retail clients and a strong sales pipeline in French-speaking markets, and would accelerate 7digital’s profitability. The board said it would be earnings enhancing after an integration period.

7digital anticipated overhead synergies of more than £500,000 per year from 2017, once the Snowite brand was integrated into 7digital with all new activity being under the parent firm’s name.

Consideration for the acquisition was 7.32 million shares on completion.

"We are delighted to welcome Snowite to the group. With major French customers in the retail, mobile entertainment and media sectors and a strong sales pipeline in French-speaking markets, Snowite will accelerate 7digital's international expansion while strengthening our relationships with French music labels and publishers,” said CEO Simon Cole.

“Snowite's platform and technology should also benefit our development roadmap and allow the Company to make cost savings in planned future platform investment."

7digital shares were sliding for much of the day, and at 1540 BST were down 4.23% at 8.5p.