7digital to buy French music streaming provider Snowite

7digital has agreed to acquire French digital streaming music provider Snowite, which is currently trying to extricate itself from insolvency.

Subject to completion, 7digital will issue 7.3m consideration shares to Snowite. Based on the closing mid-market share price on the day prior to this announcement, the consideration shares have a value of around £485,000.

Subject to completion, the 7.3m shares will represent around 6.34 % of the enlarged issued share capital of the company.

7digital noted that the transaction is subject to a decision by the French Commercial Court, as Snowite is currently in a state of “Procédure de Sauvegarde” under French insolvency law, a process similar to Chapter 11 in the US.

Completion of the acquisition is expected on or around March 30. 7digital said the reason for the announcement on Wednesday is that the court proceedings and 7digital’s part in them will imminently be public.

Following the signing of the heads of terms, 7digital has approached the official receiver in France to begin the process of agreeing a repayment schedule for Snowite’s outstanding debt, which is expected to be €1.8m (£1.3m).

Chief executive officer Simon Cole said: "This transaction represents an example of the consolidation which we have always anticipated in the market for B2B supply of digital music and radio services globally; we have positioned 7digital to be ready for this.

“Assuming we achieve the Court debt repayment schedule that we anticipate, the acquisition of Snowite gives us important new recurring revenues, an accelerated move to profitability and creates shareholder value on advantageous terms."

At 1055 GMT, 7digital shares were up 3.8% to 6.88p.