The Orchard and the Independent Online Distribution Alliance (IODA), the two largest digital aggregators in the United States, are merging. Sony Music Entertainment will be a strategic investor in the combined entity, sources tell Billboard.biz.
As part of the deal, Sony, which already owns 51% of IODA, would have to accelerate the acquisition of the remainder of that company so that it can complete the deal with the Orchard, sources suggest. Sony will own at least 50% of the merged company, the sources add. As a result of the deal, the merged company will have revenues of about $130 million, according to sources.
This deal comes in the wake of the merger between INgrooves and Fontana, which was announced last week. In that deal, Shamrock Capital acquired Fontana from the Universal Music Group and merged it with INgrooves, leaving the major as a minority investor with a 15%-20% stake in the combined entity.
In this latest deal, Dimensional Associates, the private equity arm of JDS Capital Management, which is the majority owner of the company, will retain a stake in the merged company. But sources speculate that there probably is an option for Sony to buy out Dimensional Associates at a later date, just like there was in the IODA deal.
Orchard, IODA and Sony had not commented at deadline.