Tuesday, October, 15, 2019 04:05:59
  • This deal with Tencent would increase value of UMG in the restricted but growing music market of China.
  • Investment banks have estimated the worth of UMG business to be somewhere between 17 billion and 44 billion.

Vivendi is reportedly in talks to sell off approximately 20% shares of Universal Music Group (UMG) to Tencent, a renowned Chinese multinational conglomerate company as it is keen to extend itself into China’s restricted but rapidly-growing music market.

UMG is the world’s largest and foremost music label, ahead of Warner Music and Sony Music Entertainment. Moreover, the company is also home to some of the world’s most renowned artists such as Lady Gaga, Kendrick Lamar, Drake, and Taylor Swift.

While this deal with Tencent would increase value of UMG in the restricted market of China, it would also work well with Tencent’s subsidiary, Tencent Music Entertainment (TME).

Vincent Bollore, the billionaire businessman who controls Vivendi, stated that Tencent would initially acquire 10% of UMG and would later have the option to procure an additional 10%. The company is thinking to cash-in on public demand for ad-based music streaming service and subscription, which has boosted UMG’s margin of profit in the recent years.

The French media conglomerate stated that this deal might give UMG a preliminary equity valuation of approximately €30 billion ($34 billion), even better than what some had initially thought.

Vivendi previously announced that it would be selling a part a UMG in the previous year, but only progressed a bit until it announced that it shortlisted certain investment banks to begin with a formal sale process, which is expected to be finalized at the beginning of 2020.

Investment banks have estimated the worth of business to be somewhere between €17 billion and €44 billion. Vivendi also stated that the sale of minority stakes in UMG would continue further to other partners.

Source Credit:

https://www.reuters.com/article/us-vivendi-universal-tencent-holdings/vivendi-in-talks-to-sell-10-of-universal-music-group-to-tencent-idUSKCN1UW0HN