Square (SQ) - Get Report said Thursday that it agreed to pay $297 million for a majority stake in the music-streaming platform Tidal and that hip-hop legend Shawn "Jay-Z " Carter would join the financial-services company's board once the deal closes.
Shares of the San Francisco payment-processing specialist at last check were 2.6% lower at $228.19.
The transaction is expected to close in the second quarter. Square does not expect Tidal’s financial results to have a material impact on its consolidated revenue or gross profit in 2021. Tidal will operate independently within Square, the company said, alongside Seller and Cash App.
Square said in a statement that certain current artists will be the remaining stakeholders in Tidal. Jay-Z is a holder and director of Tidal.
“It comes down to one simple idea: finding new ways for artists to support their work,” Jack Dorsey, co-founder and chief executive of Square, said in a statement.
“New ideas are found at intersections, and we believe there’s a compelling one between music and the economy."
"Artists deserve better tools to assist them in their creative journey," Carter said. "Jack and I have had many discussions about Tidal’s endless possibilities that have made me even more inspired about its future."
Tidal is available in 56 countries and has more than 70 million songs and 250,000 videos. It was launched in 2014 by Norwegian company Aspiro and is now owned by Project Panther Bidco, a British-American holding company.
On Tuesday, Square said its industrial bank, Square Financial Services, has begun operations.
Square Financial Services, based in Salt Lake City, will "offer business loan and deposit products, beginning with underwriting and originating business loans for Square Capital’s existing lending product,” the company said.