12/10/2019

Vivendi set for Tencent UMG investment, plus interest from others

Vivendi set for Tencent UMG investment, plus interest from others

Vivendi’s latest quarterly financial results gave an update on the company’s plans to sell up to half of Universal Music off to partners. Talks with Tencent to buy up to 20% of UMG continue: Vivendi said that the due diligence and legal documentation should be finished within the next few weeks. That deal valued UMG at around $33bn, with the good news for Vivendi being – according to the company anyway – that other potential investors have emerged showing “interest” in buying a stake at roughly the same valuation.
As for the financials, they showed that UMG’s revenues in the third quarter of 2019 were €1.8bn (around $2bn), up 16% year-on-year. That included a 13.3% rise in UMG’s recorded-music revenues to €1.4bn, with streaming accounting for €837m ($936m) of that – streaming growth for UMG’s recorded-music division of 19.7% year-on-year. Music publishing revenues grew by 8.3% to €293m ($328m).

And that’s not all: in a further statement, Vivendi said: “[There is a] continuing process for the potential sale of an additional minority stake in UMG to other partners. Some have already expressed an interest in investing at a similar price level.”

That price level was set by Tencent in August, when it announced that it had made a bid for 10% to 20% of Universal, in a move that valued UMG at €30bn ($33bn).

According to Vivendi’s update, Tencent’s bid comprises a “strategic investment of 10% of the share capital, with [an] option to acquire an additional 10%”. Vivendi said it may use proceeds from the deal “for a significant share buyback program and bolt-on acquisitions”.