Spotify has long been linked with going public in the U.S. — it is speculated to be preparing for an IPO-less listing next year — but it has emerged that the company rebuffed the opportunity to sell to a major tech name earlier this year: Tencent, the Chinese internet giant valued at $38 billion.
Tencent is said to have approached Spotify with a view to acquiring the company to extend its burgeoning music business outside of China and Asia, a source with knowledge of discussions told TechCrunch.
Spotify and Tencent both declined to comment when we got in touch.
It isn’t clear whether talks got to the point that a price was discussed between the two — Spotify’s intent on going public is clear so it may not have advanced to that stage — but it’s an interesting thread to pull.
Spotify has emerged as the top music streaming service worldwide, with more than 140 million active users and 60 million paying customer. The 11-year-old company is reportedly valued at $13 billion, its primary rival is Apple, which launched its service years later and continues to play catchup. Apple Music reached 27 million paying users this past June.
It isn’t hard to see how Spotify would appeal to Tencent, which has spent time developing its music business. Its primary unit, Tencent Music, was spun out following a merger between Tencent’s QQ Music business and China Music Corp last year.
It’s already a veritable beast in its own right, with 600 million users of its three main services: QQ Music, Kugou and Kuwo. Tencent Music is reported to be seeking to raise capital from strategic investors at a $10 billion valuation ahead of a planned IPO.
But beyond that lucrative China-based business, Tencent has been exploring additional global markets and segments. It operates Joox, a freemium music service that has gained significant momentum in Southeast Asia where it competes with Spotify and others, and made a significant investment in karaoke app maker Smule earlier this year, too.
Spotify, which is present in over 60 countries, could massively amp up that international focus. But it isn’t to be.
Spotify’s previous big name suitors have included Google and, erm, MySpace. Spotify itself has tried on more than one occasion to buy Soundcloud. The 10 plus acquisitions Spotify has closed have been mostly small, talent-led deals that boost its service or tech.