Vinyl Group, the only music company listed on the Australian Securities Exchange (ASX), has taken a significant step in its growth by acquiring the assets of the London-based Web3 platform, Serenade. The acquisition includes all assets of Serenade, a pioneer in the realm of digital and physical collectibles, marking a move that aims to expand Vinyl Group’s reach within the rapidly evolving Web3 space. The acquisition was finalized through a business deed sale, which also included 100% ownership of Serenade’s UK subsidiary, giving Vinyl Group a stronger foothold in both physical and digital music distribution.
Serenade has gained recognition for its digital marketplace, where it has collaborated with over 200 global artists, including well-known names such as Liam and Noel Gallagher, Muse, Sum 41, and Thirty Seconds to Mars. The marketplace offers unique NFC-enabled Smart Formats, which have shown steady growth, with sales increasing by 56% month-over-month since their launch in January. Over 12,000 units of these formats were sold in the first half of the year alone, further solidifying Serenade’s role as a leader in innovative music formats. Serenade has also formed partnerships with over 100 record labels, including Warner Music Group and Beggars Group, adding significant value to its brand.
Vinyl Group sees this acquisition as a means of strengthening its position in the digital and physical collectibles market. Serenade will continue to operate alongside the Vinyl brand, with a primary focus on improving gross margins in Vinyl’s fastest-growing division. Serenade’s established commercial partnerships and its roster of globally recognized artists offer a considerable advantage as Vinyl Group moves forward with its expansion plans.
The acquisition was structured through the issuance of shares. Vinyl Group agreed to purchase 100% of Serenade’s assets, excluding the R&D receivable, for a total of $800,000 in shares. The shares were valued at the 15-day volume weighted average price (VWAP) of Vinyl Group shares on the ASX in the days leading up to the transaction. This resulted in the issuance of 8,214,274 ordinary shares, which will be subject to a 12-month escrow. Additionally, Vinyl Group will issue further shares valued at $1,500,000 to Serenade’s shareholders if specific financial targets are met. The conditions include achieving at least $4,000,000 in revenue and $500,000 in earnings before interest and taxes (EBIT) within 12 months of the acquisition’s completion.
Vinyl Group also acquired Serenade’s UK subsidiary on a debt-free, cash-free basis, which includes a one-month put option priced at $1.00. This move is designed to facilitate Vinyl Group’s expansion into the UK and European markets, positioning the company to tap into a broader audience.
As part of the acquisition, several key employees from Serenade have joined Vinyl Group, including Serenade’s CEO, Max Shand. Shand has entered into a full-time employment agreement with Vinyl Group and will continue to lead Serenade’s efforts to achieve its post-acquisition goals. Shand will also contribute to the broader strategic goals of Vinyl Group, particularly in expanding its product range in both physical and digital collectibles. To ensure Shand’s alignment with the company’s performance targets, Vinyl Group has granted him five million options. These options will vest in two equal tranches: one upon achieving the 12-month revenue and EBIT goals, and the other on the second anniversary of his employment. The options have a seven-year term and an exercise price that will be determined before they are issued.
Vinyl Group’s CEO, Josh Simons, expressed confidence in the acquisition, noting that Serenade represents a business with considerable potential. Simons emphasized that Vinyl Group, being a technology-focused company, saw the acquisition as a natural extension of its technological capabilities, and welcomed Max Shand and other key members of the Serenade team to the company.
Max Shand also expressed his excitement regarding the acquisition, highlighting the shared vision between both companies for supporting artists and enhancing the music experience for audiences through innovative products. He further acknowledged the dedication and talent of the Serenade team, whose efforts played a crucial role in making the acquisition possible.
The acquisition was finalized over the weekend, with Vinyl Group completing its due diligence and notifying the seller accordingly. As part of the agreement, Vinyl Group also committed to covering Serenade’s verifiable legal and accounting costs, which are capped at $20,000. The deal represents a strategic move for Vinyl Group, positioning it to enhance its offerings and expand its presence in international markets.
