French music streaming company Deezer S.A. is set to go public via a merger with a special-purpose acquisition company in a $1.13 billion deal.

The Wall Street Journal reported today that the SPAC deal will see Deezer merge with Paris-listed I2PO SA. The firm is a blank-check company backed by the Pinault family, the controlling shareholders of Gucci parent company Kering SA, and Centerview Partners Holdings LP banker Matthieu Pigasse. I2PO is headed by former WarnerMedia LLC executive Iris Knobloch.

Founded in 2006, Deezer, though not particularly well-known in North America, is a competitor to Spotify Technology SA. The company has 9.6 million paying subscribers and generated €400 million ($431 million) in revenue in 2021. By comparison, Spotify had 180 million paying subscribers as of the end of 2021, with revenue of $3.04 billion.

Deezer has a music catalog of 90 million-plus songs and also offers podcasts, audiobooks and radio channels. The company was rumored to be looking to go public in 2015, but a deal did not happen. Variety noted that Deezer’s decision to not go public that year was the result of a steep decline in listeners at Pandora radio, indicating a cooling market for streaming services.

Deezer has a 29% market share in France and 17% in Brazil. Globally, Deezer holds only a 2% market share compared to Spotify’s 31%, Apple Music’s 15% and Amazon Music’s 13%. Deezer promotes its service through partnerships with media or telecom groups to enter new markets.

“What we’re trying to do with our partners is replicate the Apple and Amazon strategy, but we bring the music product and they bring the user base, so together we can replicate that model,” Jeronimo Folgueira, Deezer’s chief executive officer, told the Journal. “We need to compete against them and our partners need to compete against them, and together we can compete better.”

Once the SPAC merger is complete, Deezer will have €425 million ($458 million) to invest in growth. Coming into the deal, Deezer had never been profitable and reported a loss of €120.6 million ($130 million) in 2021 and €88.3 million ($95 million) the previous year.

Deezer has raised $531.8 million in venture capital funding, according to Crunchbase. Investors include Orange, Kingdom Holding Company, Access Industries, Idinvest Partners and CM-CIC Capital.

Image: Deezer/Apple Store