Square, Inc. has announced plans to acquire a majority ownership stake in Tidal in a surprising deal that would bring together two very different companies. The deal is expected to cost US$297 million in a mix of cash and stock, while existing artist shareholders would remain stakeholders.
Square is the company that makes point-of-sale terminals and gadgets that connect to smartphones and tablets so independent and mobile retailers can make transactions from their mobile devices. Tidal, meanwhile, is a hifi music streaming service.
As per the deal, Square would name Shawn “Jay-Z” Carter to its Board of Directors and Tidal would operate independently within Square, along its Seller and Cash app ecosystems.
Square says it has been looking to expand to new verticals, including musicians, and plans to use its products, technologies, and knowledge to help musicians find new ways to support their work.
“It comes down to one simple idea: finding new ways for artists to support their work,” says Jack Dorsey, co-founder and CEO of Square. “New ideas are found at intersections, and we believe there’s a compelling one between music and the economy. I knew Tidal was something special as soon as I experienced it, and it will continue to be the best home for music, musicians, and culture.”
“I said from the beginning that Tidal was about more than just streaming music, and six years later, it has remained a platform that supports artists at every point in their careers,” adds Shawn ‘Jay-Z’ Carter. “Artists deserve better tools to assist them in their creative journey. Jack and I have had many discussions about Tidal’s endless possibilities that have made me even more inspired about its future. This shared vision makes me even more excited to join the Square board. This partnership will be a game-changer for many. I look forward to all this new chapter has to offer!”
Tidal is a music service built by artists, for artists, and promises superior sound quality and an extensive catalog of more than 70 million songs and 250,000 high-quality videos. Artists have direct access to their audience while fans can more deeply connect to their favourite artists through original, exclusive, and curated content and events.
Tidal has a global presence with listeners in more than 56 countries and relationships with more than 100 labels and distributors.
“Tidal sets a high standard for supporting artists, capturing music culture, and delivering the best audio quality to fans,” adds Jesse Dorogusker, a Square executive who will serve as interim lead of Tidal upon the closing of the transaction. “Square has also set a high standard for building elegant, accessible, and fair tools for sellers and individuals to economically empower them. Together, Tidal and Square will be music-obsessed and artist-focused while we explore new artist tools, listener experiences, and access to financial systems that help artists be successful.”
Tidal board member and shareholder Shawn “Jay-Z” Carter is expected to join Square’s Board of Directors subject to the closing of the transaction. In addition to Jay-Z, all of Tidal’s artist shareholders will continue to be co-owners of Tidal after the deal closes.
Based on current information, Square does not expect Tidal’s financial results to have a material impact on Square’s consolidated revenue or gross profit in 2021. The completion of this transaction is subject to customary closing conditions including regulatory approvals. The parties expect to close the transaction in the second quarter of 2021. Square was primarily advised by Gibson, Dunn & Crutcher LLP as legal advisors and TIDAL was advised by Reed Smith LLP and Cummings & Lockwood LLC as legal advisors.