Spotify has secured US $ 1.3 billion in debt through the sale of private exchangeable senior notes to “qualified institutional buyers”.
According to a press release released yesterday (February 24), the bonds are senior, unsecured obligations of the US company Spotify USA from Spotify, unless repurchased, redeemed or exchanged earlier ”.
SPOT’s explanation of what it plans to do with this money is rather vague, saying only that it intends to use the proceeds from the offering for “general corporate purposes.”
General corporate purposes can relate to investments, share buybacks, or even acquisitions.
If it’s the latter, what could Spotify possibly be in the market costing over $ 1 billion?
There are a number of options that SPOT could choose here, but we should remember that the company’s acquisitions over the past 24 months have been largely podcast-related.
For example, in November we learned that Spotify had bought the podcast advertising and publishing platform Megaphone for $ 235 million in cash.
The $ 235 million spend on megaphones resulted in Spotify closing podcast-related acquisitions worth more than $ 800 million since February 2019 by November 2020.
Spotify spent $ 375 million in cash in 2019 alone buying podcast companies: (i) based in New York anchor FM, which allows users to create and distribute podcast content that SPOT purchased on February 14 for a total of € 136 million ($ 154m); (ii) Podcast Producer Gimlet Media, for a total retail price of $ 195 million; and (iii) Parcast, which Spotify acquired in April 2019 for $ 55 million.
Spotify also issued over $ 200 million Acquisition of the sports media company Ringer, founded by Bill Simmons, under a contract announced in February 2020.
SPOT has not only bought companies in the past two years, but has also spent a lot of money on exclusive podcast content and talent deals, for example with Joe Rogan for $ 100 million early last year and with Harry and Meghan late last year 2020 ( in a deal reportedly valued at around $ 50 million).
And if we want to think even bigger than podcasts, what else could Spotify spend $ 1 billion on acquisitions?
One particular company (and one that has made a lot of headlines lately) comes to mind immediately: Clubhouse.
The social app is nearing a $ 1 billion valuation after a recent increase, leaving SPOT with enough cash in the bank to pay the bill.
When asked about the company’s fourth quarter call when Spotify CEO Daniel Ek was planning to add social features to its platform, he said the company was “very interested” in the idea and that SPOT was “obviously paying”[s] Pay close attention to everything that is happening in markets around the world and new developments in the audio space. “
The analyst who asked the question stated that “apps like Clubhouse could have an interesting entry here”.
Ek added, “I’ve said that many times. We are in the early stages of innovation in audio formats and the interactivity between creator and fan is definitely one of the things we pay attention to and look at.
“We’re already doing experiments on this … I don’t have any specific information to post here, but there is a lot more to come in the coming months of this year when it comes to developing fan engagements.”
The clubhouse is of course based on voice and audio rather than visual input, and as MBW has suggested, integrating an audio-centric social function on the Spotify platform would be an interesting development.
Even so, Spotify may not use its new $ 1.3 billion mountain of debt to make an acquisition at all. However, this does not mean that there will be no exciting developments in the company.
For one, it would go a long way toward advancing some of the tech patents Spotify granted last year – in areas like 3D audio, personality tracking technology, and a platform karaoke mode.Music business worldwide