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Spotify and Tencent’s music business have struck a deal to acquire minority stakes in each other, as the world’s largest streaming services partner up ahead of public listings planned for next year.

The companies will buy new shares in each other with cash, giving Spotify a minority stake in Tencent Music Entertainment, while both Tencent and TME, will take stakes in Spotify.

Spotify operates in 61 countries, but not yet China. The company views this as a way to get a foothold in the country, while also shoring up its finances ahead of a public listing early next year, according to people familiar with the matter.

Daniel Ek, Spotify’s founder and chief executive, said the deal “will allow both companies to benefit from the global growth of music streaming”.

With more than 140m customers, including 60m who pay for it, Spotify is the largest music streaming service in the world. The company was most recently valued at around $16bn, although analysts have said it would be worth upwards fo $20bn upon going public, as fast user growth and a budding recovery in the music business has raised its prospects.

Spotify is aiming to list on the New York Stock Exchange early next year. Tencent Music was last year valued at about $6bn, and is also reported to be gearing up to go public next year.

Image source: Reuters

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