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Utopia sued by LA-based rights platform that it planned to acquire
By Chris Cooke | Published on Wednesday 15 February 2023
LA-based music rights management and licensing platform SourceAudio has sued Utopia Music over an allegedly stalled deal via which the latter was meant to acquire the former.
According to Law360, SourceAudio claims that a deal was agreed with Utopia in March last year, shortly after the flurry of acquisitions which saw Utopia expand significantly through the purchase of Proper Music, Absolute and Sentric Music.
The lawsuit filed by SourceAudio with the courts in Delaware claims that the deal was worth $26.5 million. Utopia paid a £3 million deposit upon signing the deal, with plans to fully complete the acquisition in May.
However, that deadline was subsequently pushed back multiple times. After each deadline extension was agreed, SourceAudio claims, “Utopia engaged in a pattern of discontinuing discussions for an extended period of time, only to resurface immediately before the next intended closing date to indicate that it was unable to close by such date”.
After the sixth delay, the deal between SourceAudio and Utopia was altered, increasing the value of the company being acquired. Utopia also apparently agreed to add $167,000 to its deposit payment each week until the deal properly closed. But, SourceAudio alleges, the deal never completed and Utopia got behind on its deposit payments.
In its lawsuit, SourceAudio wants the court to force Utopia to either complete its acquisition of the LA-based company, or pay it no less than $37.26 million in damages.
Following the rapid growth through acquisition in early 2022, towards the end of the year Utopia announced it was downsizing its workforce. Then in January it was revealed that CEO Markku Mäkeläinen had departed the company, with founder Mattias Hjelmstedt filling in on an interim basis.
Utopia hasn’t commented on the SourceAudio litigation, but a legal rep for the plaintiffs told Law360: “Utopia has breached a binding contract with SourceAudio. SourceAudio is simply requesting that Utopia honour its contractual obligations to SourceAudio”.
