Tuesday, March 31, 2020

Done deal: Tencent-led consortium completes $3.4bn acquisition of 10% of Universal Music Group | Music Business Worldwide

China-based Tencent Holdings – as the leader of a consortium of backers – is now the proud owner of 10% of Universal Music Group.

UMG parent Vivendi announced the completion of the long-awaited deal today (March 31), exactly three months after the contractual agreement of the acquisition was announced (December 31).

The deal gives Universal Music Group an implied Enterprise Value of €30bn. At last year’s annual exchange rate, that would equate to UMG being worth $33.7bn.

It also means the Tencent-led consortium has acquired its 10% for €3bn, or approximately $3.37bn.

The consortium includes Tencent alongside Tencent Music – in which it is majority owner – plus other financial investors, and can acquire a further 10% in UMG at the same price by January 15, 2021.

In a further important news, Vivendi has confirmed that Tencent Music is acquiring a stake in UMG’s Greater China operation for an undisclosed price.

Don’t expect this to be the last we hear about minority stake sales in Universal Music Group, either.

Vivendi said in an update today:  “Now that this very significant strategic operation has been completed, Vivendi will pursue the possible sale of additional minority interests in UMG, assisted by several banks which it has mandated.”

It added: “Vivendi is very happy with the arrival of the Tencent-led consortium. It will enable UMG to further develop in the Asian market.”

The company reiterated that an IPO of UMG – which would presumably spin the company out from Vivendi to some degree – is planned, for early 2023 at the latest.

Vivendi said that it “intends to use the proceeds from these different transactions for substantial share buyback operations and acquisitions”.

Universal Music Group, led by CEO & Chairman Sir Lucian Grainge (pictured), saw its overall revenues in 2019 – across recorded music, publishing and other activities – hit €7.16bn ($8.04bn).

A record annual figure for the company under Vivendi ownership, that revenue number was up 14.0% year-on-year at constant currency and perimeter.Music Business Worldwide

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