Stingray shelves Music Choice buy, citing price ‘disagreement’

Stingray Group Inc. said it is aborting its previously announced unsolicited bid to purchase Pennsylvania-based music company Music Choice, spelling the end of its third attempt to nab the company. “While we continue to see benefits in a combination of Music Choice with Stingray, we are extremely confident in our strategic direction and are excited by the significant opportunities before us,” Eric Boyko, president and CEO of Stingray, said in a Wednesday press release. Mathieu Peloquin, spokesman for the Montreal-based company, said in an email the decision to ditch the deal had nothing to do with patent infringement lawsuits embroiling the companies, but “purely disagreement with the purchase price.” That price was $120 million, offered earlier this year by the company, which has accumulated an extensive list of recent acquisitions. Analysts described the potential deal as “attractive” and a “perfect fit” for Stingray. Desjardins’ Maher Yaghi said Thursday the deal’s abandonment represents a “negative” for the company’s stock, but said there’s still “good long-term upside.” The negative development, however, is cushioned by the company’s alternative route in the U.S. market, in the form of a new distribution agreement with U.S. cable TV company Altice USA, announced Monday. The deal, praised by Yaghi as a positive, will see “one of the largest broadband communications video services providers” in the U.S. provide Stingray content to its nearly five million subscribers. Analyst Adam Shine said in a research note Wednesday that "the possibility of a Music Choice purchase appeared as an attractive call option given the large synergies to be extracted and the prospect of a removal of a competitor that wasn’t averse to legal fights." RBC analyst Drew McReynolds said in a note that while "closing the door for now on this potential transaction is a modest disappointment, we do not believe the shares ever reflected a high likelihood of a successful transaction." He added the deal with Altice is a positive for the company. Boyko said in the press release the deal marks an “important step toward” expanding in the U.S.. The bid’s breakdown follows dueling lawsuits involving patent infringement and breach of non-disclosure agreement matters filed by both companies against each other -- starting with one filed by Music Choice in a Texas court in 2016 and then a counter by Stingray, in part challenging the validity of the American company’s patents. According to Stingray’s latest quarterly report, the U.S. Patent Trial and Appeal Board (PTAB) had so far invalidated several of Music Choice’s patent claims as of late last year.

Stingray shelves Music Choice buy, citing price ‘disagreement’

Brief | January 3, 2019

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Stingray shelves Music Choice buy, citing price ‘disagreement’

Brief | January 3, 2019

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