U.K. supermarket giant Tesco has acquired London-based digital music service We7 for £10.8 million ($16.8 million), in which music legend Peter Gabriel owns a stake.
The deal expands Tesco's digital entertainment offerings that already include online movie rental firm Blinkbox, which it acquired last year. The retailer is already one of the biggest seller of CDs.
The company said it has bought a 91 percent stake in We7, which calls itself a "digital jukebox," and will acquire the rest within weeks.
Gabriel founded the company in 2007 with with CEO Steve Purdham. According to the Guardian, Gabriel stands to make around £2.0 million ($3.1 million) from the deal.
"Customers and technology together are transforming the way we listen to music," Mark George, Tesco's digital director, said in a statement. "Tesco is already one of the U.K.'s largest retailers of CDs; this move will help us offer a greater choice for the growing number of customers who want to access music instantly on any device, whenever and wherever they want."
He added: "We7 has a great team and a good technology platform from, which we can launch a range of digital music services in the future."
We7, which Purdham earlier this year said was close to turning a profit, has a catalog of 11 million music tracks.