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Square to acquire Jay-Z’s music service Tidal in $297 million deal

Mobile payments company Square announced Thursday that it has finalized a deal to purchase a majority stake of Tidal, the music streaming service run by billionaire rapper Shawn “Jay-Z” Carter.

Square said it will pay $297 million in stock and cash for a “significant” majority stake in Tidal, which will continue to operate independently within Square, according to the announcement. 

Jay-Z and other existing artist shareholders will retain some ownership of the company and Jay-Z is expected to join Square’s board, subject to the closing of the transaction. 

The payment processing company, which is run by Twitter CEO Jack Dorsey, said the deal will help extend Square’s “purpose of economic empowerment,” supporting artists with “financial freedom.” 

Jay-Z acquired Tidal in 2015 for $56 million with the vision of creating the first artist-owned streaming service, but the company has struggled to keep up with competitors like Spotify, Apple and Amazon. 

CRUCIAL QUOTE 

“Given what Square has been able to do for sellers of all sizes … we believe we can now work for artists to see the same success for them, and us,” Dorsey said in a statement Thursday morning. “New ideas are found at intersections, and we believe there’s a compelling one between music and the economy.” 

KEY BACKGROUND 

This announcement comes less than two weeks after Jay-Z made public a partnership between his champagne company, Armand de Brignac (known by its nickname Ace of Spades), and the wine and spirits division of LVMH. Forbes valuesthe deal, in which the Roc Nation founder agreed to sell 50% of his champagne business to LVMH’s Moet Hennessy, at roughly $630 million.

Here’s How Much Jay-Z Made On His Ace Of Spades Deal

The partnership announced on between Jay-Z and the wine and spirits division of LVMH makes the billionaire rapper the latest celebrity to pocket a windfall by selling part of a consumer brand to a major distributor. The deal appears to have valued the brand, Armand de Brignac, at more than $600 million, which would land him a cash payment of at least $300 million—about $50 million more than he would have made based on the $500 million value he rapped about in Meek Mill’s 2018 song “What’s Free.”  

The founder of RocNation sold 50% of the champagne business to LVMH’s Moët Hennessy in a move aimed at “taking the business to new heights across the world,” according to Moet’s CEO Philippe Schaus.  LVMH is known to bid competitively, and that certainly appears to have been true for this latest deal. 

Forbes values the deal for the bubbly wine, known by its nickname Ace of Spades thanks to its logo design and several of Jay-Z’s lyrics promoting it, at roughly $630 million, based on conversations with five beverage analysts and industry insiders. That’s double Forbes’ previous valuation of the brand. The terms of the deal have not been publicly reported by LVMH or Jay-Z, whose company will still handle production. Neither side would comment, but based on analyst estimates, Jay-Z likely pocketed at least $315 million in the deal.  

“The multiples for Armand de Brignac—based on the category and volume size of the brand—far outreach brands that don’t have that celebrity ownership,” says beverage market analyst Eric Schmidt. 

Still, it’s not the biggest celebrity cash out by a long shot: Kylie Jenner sold 51% of her cosmetics company to Coty in a deal that valued the brand at more than $1 billion; she got $540 million pre-tax. Rapper-Producer Dr. Dre sold his audio product company Beats to Apple in 2014 for $3 billion, pocketing $585 million himself before taxes. 

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Written by The Editor

warrior dedicated to the cause of fighting the takeover of our culture.

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