Photo Credit: Vinyl Group
Australia’s Vinyl Group has completed an agreement to acquire the assets of London-based Web3 platform Serenade.
Vinyl Group, the only music company listed on Australia’s Securities Exchange (ASX), has entered into an agreement to acquire the assets of London-based Serenade, a Web3 pioneer of physical and digital collectibles, through a business deed sale which includes 100% of the shares of Serenade’s UK subsidiary.
Serenade’s digital marketplace has served over 200 global artists, including Liam and Noel Gallagher, Muse, Sum 41, Twenty-One Pilots, and Thirty Seconds to Mars. Sales of their NFC-enabled Smart Formats have grown 56% month-over-month since launching in January, with a total of 12,000 units sold in the first half of the year.
Further, Serenade has commercial partnerships with over 100 record labels, including Warner Music Group, Beggars Group, Concord, Glassnote, FUGA, and PIAS. It will operate alongside the Vinyl brand with the goal of improving the gross margins of its fastest growing division.
Vinyl Group has acquired 100% of Serenade’s assets (excluding their R&D receivable) in exchange for $800,000 in shares, valued at the 15 day volume weighted average price (VWAP) of Vinyl Group shares on the ASX for the period immediately preceding the completion date, for a total of 8,214,274 ordinary shares. These shares will be subject to a 12-month escrow from the date of issue.
A further $1,500,000 in shares will be paid to the shareholders of Serenade, contingent on the combined business of Vinyl.com and Serenade achieving a minimum revenue target of $4,000,000 and Earnings Before Interest and Taxes (EBIT) of $500,000 in the 12 months following the completion date.
The company will also purchase Serenade’s UK subsidiary on a debt-free, cash-free basis, free of any and all encumbrances, for $1.00 with a one-month put option, for the purposes of expediting the expansion of the business into the UK and European markets.
As part of the deal, key Serenade employees have joined Vinyl Group, with Serenade CEO Max Shand entering into a full-time employment agreement with Vinyl Group, to both lead Serenade to achieve its performance goals while also helping to rapidly accelerate the Vinyl business. This will aid in expanding its product offerings into physical and digital collectibles while launching into additional markets.
To incentivize performance, Shand will receive five million options upon sale completion, vesting in two equal tranches. The first vests upon the combined business of Vinyl and Serenade achieving 12 month post completion goals of $4,000,000 in revenue and $500,000 in EBIT, aligned with the performance stock offered to Serenade shareholders. The second tranche vests on the second anniversary of an employee’s employment. These options will have a seven-year term and will have an exercise price to be agreed between the purchaser and Shand prior to the issue of the options.
“Max Shand has built Serenade into a business with significant potential, and through our acquisition of the platform, we’ll put the resources into Serenade to allow it to reach that potential,” said Vinyl Group CEO Josh Simons. “Vinyl Group is, at its core, a tech business, and this was a great opportunity to expand our tech offering. We look forward to welcoming Max and other key members of the Serenade team to Vinyl Group.”
Serenade CEO Max Shand concludes, “I’m thrilled to announce the acquisition of Serenade by Vinyl Group, Australia’s only ASX-listed music company. From our very first conversation, it was clear that Josh […] and the board shared our vision for supporting artists and audiences through outstanding music products, and so I’m excited to see how this partnership accelerates our impact. I also want to acknowledge the incredible Serenade team, whose passion, integrity, talent, and dedication made this all possible.”
The deal was completed over the weekend, with the buying giving notice to the seller that due diligence had been satisfied. Vinyl Group has agreed to pay the verifiable legal and accounting costs of Serenade capped at $20,000.
