Vivendi has closed the sale of 10% of its subsidiary Common Music Group to a consortium led by the Chinese language tech big Tencent. The deal, which was introduced in December, values UMG at €30 billion ($33 billion).
As half of the settlement, the consortium – which incorporates Tencent Music Leisure, in addition to different monetary co-investors — has the choice to purchase one other stake of up to 10% on the similar worth by January 15, 2021.
“Vivendi could be very proud of the arrival of the Tencent-led consortium. It’ll allow UMG to additional develop within the Asian market,” mentioned the French media conglomerate.
The corporate, which additionally owns Canal Plus Group, mentioned it is going to now search to promote further minority pursuits in UMG with the assistance of a number of banks which it has already mandated.
As beforehand reported, UMG is planning an IPO by early 2023. Vivendi mentioned it “intends on utilizing the proceeds from these offers for substantial share buyback operations and acquisitions.”
When Vivendi first introduced plans to promote up to 50% of UMG in 2018, it took many business gamers and buyers unexpectedly. UMG is Vivendi’s crown jewel and has underpinned its monetary outcomes for a number of years. Headed by chairman and CEO Lucian Grainge since 2011, UMG is by far the world’s largest music firm.
Vivendi noticed its annual revenues leap by 14% to €15.eight billion ($17 billion) in 2019, pushed by UMG whose revenues reached greater than $7.7 billion, up 14% thanks to a 21.5% surge in streaming income. UMG’s recorded music greatest sellers for 2019 included new releases from Billie Eilish, Put up Malone, Taylor Swift and Ariana Grande.
Tencent Music Leisure, a separately-listed subsidiary of Tencent, has an possibility to purchase a minority stake in UMG’s Higher China enterprise, inside two years of Tuesday’s deal completion.
Tencent Music Leisure is China’s main on-line music distributor and claims greater than 600 million month-to-month customers for its QQ Music, Kugou Music, Kuwo Music and WeSing apps. It not too long ago reported 2019 revenues of $3.65 billion and web revenue of $572 million.
Underneath strain from rivals, Tencent Music Leisure sees the UMG deal as half of its technique to maintain on to its Chinese language market management place. “By deepening the strategic partnership with UMG, TME expects to understand in-depth cooperation by leveraging UMG’s huge upstream content material mixed with the corporate’s profound person insights, rising promotional capabilities, and its interactive and vibrant fan-based music centric ecosystem to additional solidify the corporate’s content material management and seize the super development alternative pushed by continued digitalization of China’s music business,” Tencent Music Leisure mentioned in an announcement.
Patrick Frater in Hong Kong additionally contributed to this report.
