Hold On, MySpace/Imeem Deal Ain't Done Yet, Being Renegotiated

Last month we broke the news that MySpace was acquiring music service iMeem, and that an agreement had been signed between the two companies.

All of that was accurate, including the $1 million fire sale price. But despite reports to the contrary, while the deal was signed it never closed (which explains why MySpace hasn’t announced it).

Sometime between signing and closing some problems came up in due diligence, we’ve heard. Specifically that some of the hard assets that MySpace was acquiring, hundreds of servers, were leased rather than owned. Meaning that MySpace couldn’t buy them.

The two sides have feverishly been renegotiating the deal, say our sources. At this point a deal may still be done in the next day or so at an even lower price than the $1 million. Or the deal may be terminated altogether (we’re hearing it’s likely some sort of deal will still happen).

It’s also always been unclear exactly how much capital iMeem raised to fund the company. We’ve tracked just $25 million in announced or leaked deals on CrunchBase. But we’ve heard the total is much closer to $80 million, including debt and pre-paid royalties to music labels. It’s clear that those investors aren’t seeing any return at all on that investment. Users, though, are still hoping the service lives on under MySpace.