Vivendi Sells Further UMG Stake to Tencent-Led Consortium for $3.68 Billion -- 2nd Update
December 18 2020 - 4:54AM
Dow Jones News
--A Tencent-led consortium will purchase an additional 10% stake
in Vivendi's Universal Music Group
--The consortium acquired an initial 10% stake in UMG in
March
--Closing and payment should take place during first half of
2021
By Mauro Orru
Vivendi SE said Friday that it is selling an additional 10%
stake in its subsidiary Universal Music Group--the music giant
behind Ariana Grande and Billie Eilish--to a consortium led by
Tencent Holdings Ltd. for 3 billion euros ($3.68 billion).
The European media giant said the agreement is based on an
enterprise value of EUR30 billion for 100% of UMG's share
capital.
Closing and payment should take place during the first half of
2021, subject to regulatory approvals.
The news comes nearly a year after Vivendi announced the first
10% stake sale to the Tencent-led consortium--which includes
Tencent's streaming business, Tencent Music Entertainment
Group--for the same price.
Under the initial agreement, which closed in March this year,
the consortium had the option to buy an additional stake of up to
10% in UMG on the same valuation basis until Jan. 15.
A separate agreement was also signed in March enabling Tencent
Music Entertainment to acquire a minority stake in the capital of
the UMG subsidiary that owns UMG's Greater China operations.
The deal bolsters Tencent's exposure to some of the biggest
names in music. Universal's stable also includes classic acts such
as Queen and the Beatles.
Bob Dylan recently sold his entire publishing catalog--including
more than 600 copyrights spanning 60 years--to Universal. While
terms of the deal weren't disclosed, the catalog is likely worth
hundreds of millions of dollars.
Tencent Music Entertainment Group went public in the U.S. in
December 2018 in one of that year's highest-profile listings.
Details of Vivendi's negotiations with Tencent emerged in August
2019, a year after the Paris-listed company said it would embark on
a search for buyers to sell up to 50% of its music subsidiary in a
bid to cash in on the music-streaming revolution.
Following Friday's agreement, Vivendi said it will continue to
work with Tencent and Tencent Music Entertainment to "broaden
artist opportunities" and promote a "thriving music and
entertainment industry."
Universal is a bright spot for Vivendi, and has long been the
leading force of sales growth at the media conglomerate along with
the Canal+ Group business.
The stake divestment provides a sizeable cash return for
Vivendi, but Citi analysts said the company has been selling out
its most attractive growth assets, while the use of the
proceeds--which have been funneled into slower-growth areas--has
disappointed.
"The harsh truth is that there is less enthusiasm for that
capital to be recycled into areas like book/magazine publishing and
travel retail," Citi analysts said.
Vivendi said cash from the two stake sales could be employed to
cut financial debt, and to finance share buybacks and
acquisitions.
The company is planning additional minority interest sales in
UMG, which it plans to list in 2022 at the latest.
Write to Mauro Orru at mauro.orru@wsj.com; @MauroOrru94
(END) Dow Jones Newswires
December 18, 2020 04:39 ET (09:39 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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