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7digital Group launches new funding as it closes in on European acquisition

Simon Cole, 7Digital chief executive, describes it as a “major inflection point” for the company.
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7Digital is trying to raise just over £3mln of new capital

Digital music services group 7digital Group Plc (LON:7DIG) has set out to raise £3mln of new capital as it seeks to take control of its market.

The company, in a statement, told investors it is currently negotiating the acquisition of 24-7 Entertainment AG - its only remaining European competitor.

Simon Cole, 7Digital chief executive, described it as a “major inflection point” for the company.

“The digital music ecosystem is developing as we had expected and I am particularly pleased that we can now count all three major record labels as our customers,” he said.

Cole added: “We are also using our position in the industry to consolidate. Having successfully integrated last year's acquisition of Snowite in France, we are seeking to acquire 24-7 based in Berlin and Copenhagen and with that acquisition add MediaMarktSaturn, Europe's largest retailer of consumer electronics, to our customer base.

“The acquisition would materially enhance the Group's recurring revenue streams."

It plans to issue new shares through a placing priced at 6.5p each, to raise £2.26mln, and at the same time offers existing shareholders the chance to buy additional shares at the same price, in a £750,000 open offer.

7Digital says the new capital will be used to strengthen its balance sheet and allow it to continue investment into its core technology platform.

Due diligence is continuing for the proposed acquisition of 24-7 Entertainment, and completion is anticipated by the end of May, though the cost is estimated at £1.66mln, to be paid in 7Digital shares.

The company, meanwhile, released full year results for 2016 which it says were ‘in line with expectations’. It reported a £5.1mln loss for the year, narrowed from £7.8mln in the preceding year.

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