Vivendi turned down Softbank's $8.5 billion bid for Universal Music

Universal Music's value to Vivendi has been proved once again by reports that the global telecom and entertainment giant turned down an $8.5 billion offer from Japanese telecoms group Softbank to acquire the world's largest record label. This all happened three months ago and has been reported by the Financial Times, which cites several sources familiar with the proposal.

The offer must have been a hard one to turn down since it represented a 25% markup on most analysts' value of Universal Music which is pegged at around $6/6.5 billion. In Q1 2013 Universal Music saw its revenues rise 13.5%, while Vivendi's profits dropped 18% with overall revenues remaining flat on the previous year.

The French conglomerate has been undergoing a number of cost-cutting measures over the past year and is refocusing around its entertainment divisions. In this challenging economic framework it will have been particularly hard to justify turning down the offer to current shareholders but even though music revenues have hardly been a cause for jubilation over the past few years Universal has weathered the storm better than most.

As the industry seems to be turning a corner with the rise in digital revenues it could make sense for Vivendi to keep hold of this core asset for the time being.