destraMusic: Not IPO, AEM
Online music download company destra has announced its digital media assets will be acquired by the Australian listed Artist & Entertainment Group, not listed separately as previously reported.When destra CEO Domenic Carosa said on Tuesday that the company’s digital media assets, which includes a wholesale music download service and the website MP3.com.au, would be spun off into a separate publicly listed company, we assumed it was headed for an IPO.
It wasn’t. A deal to merge the organisation into the publicly listed Artist & Entertainment Group (AEM.AX) was ready to be signed off and was announced to the market this morning Thursday 15th September.
Artist & Entertainment Group is a management company for around 3000 established and emerging Australian artists. The three year old company will lend some intellectually property weight to the digital media business and provide a direct outlet for Australian talent.
Destra website MP3.com.au is often used as a testing ground for emerging talent, providing free music downloads to the public which allow music publishers to gauge the market potential of up-coming acts.
Under terms of the deal, AEM will acquire all of DES’s Digital Media assets. Consideration for the destra media assets will be 41,612,112 shares in AEM issued to destra and its Advisor at a price of $0.06 per ordinary AEM share. It will also grant destra 4,166,666 options @ $0.06, and a further 4,166,667 options @ $0.15 expiring in 18 months.
In return destra will subscribe $500,000 cash for 8,333,333 shares in AEM issued at a price of $0.06 per ordinary AEM share.
Together the two will seek out an “Appropriate Business acquisition” which DES will underwrite to the tune of $1,000,000.
The Digital Media assets being acquired by AEM are MP3.com.au, Musicpoint, destra Mobile, destra Music and Ghameleon.
“The acquisition of destra’s Digital Media assets by AEM and the strategic alliance between AEM and destra positions both companies to seize on the exponential growth of the digital media market,” Ben Macpherson, CEO of Artist & Entertainment Group, said. “This transaction, pursuant to the plans outlined in our prospectus, reflect that the successful establishment of our underlying operations have provided us with the platform to pursue new earnings growth from an increased strategic focus on intellectual property.”
Domenic Carosa, CEO of destra Corporation Limited, noted that “destra’s enthusiasm for the opportunity presented by Digital Media has found its natural home within the operations of AEM and we are excited by the development of a strategic alliance with AEM.
“In addition to partnering to develop destra’s digital media assets collectively with the talent management and entertainment businesses of AEM, destra anticipates that its investment of $500,000 cash in the venture will produce solid returns to destra’s shareholders.”