Vivendi has closed the sale of 10% of its subsidiary Universal Music Group to a consortium led by the Chinese powerhouse Tencent. The deal, which was signed three months ago, values UMG for €30 billion.
As part of the agreement, the consortium – which includes Tencent Music Entertainment, as well as other financial co-investors — has the option to buy another stake of up to 10% at the same price by January 15 of 2021.
“Vivendi is very happy with the arrival of the Tencent-led consortium. It will enable UMG to further develop in the Asian market,” said the French media conglom.
The company, which also owns Canal Plus Group, said it will now seek to sell additional minority interests in UMG with the help of several banks which it has mandated.
As previously reported, UMG is planning an IPO by early 2023. Vivendi said it “intends on using the proceeds from these deals for substantial share buyback operations and acquisitions.”
When Vivendi announced plans to sell up to 50% of UMG in 2018, it took many industry players and investors by surprise due to the fact that UMG is Vivendi’s crowned jewel and has been bolstering its financial results year after year. Helmed by chairman/CEO Lucian Grainge (pictured above) since 2011, UMG is by far the world’s largest music company.
Vivendi saw its annual revenues jump by 14% to €15.8 billion ($17 billion) in 2019, driven by UMG whose revenues reached more than $7.7 billion, up 14% thanks to a 21.5% surge in streaming revenue. UMG’s recorded music best sellers for 2019 included new releases from Billie Eilish, Post Malone, Taylor Swift and Ariana Grande.