Tencent-led consortium to buy another 10% of Universal Music Group, taking total stake to 20%

Universal Music Group parent Vivendi has confirmed that a Tencent-led consortium decided yesterday (December 17) to buy an additional 10% stake in UMG.

The transaction, which will take place during the first half of 2021 subject to regulatory approvals, will take the Tencent-led consortium’s total holding in UMG to 20%.

The group closed the acquisition of its fist 10% in the music company in Q1 this year. Like that acquisition, the additional 10% of UMG is being sold to the Tencent consortium based on a company enterprise value for the music firm of €30bn (around $37bn at current exchange rates).

The consortium is led by Tencent, but also includes the participation of its majority-owned subsidiary, Tencent Music Entertainment.

Vivendi, which is led by CEO Arnaud de Puyfontaine, said in a statement that it was “very happy” the Tencent consortium has decided to exercise its option to acquire the additional 10% of Universal.

Vivendi said the deal would “enable UMG to further develop its activities in Asia”, and that, together with Vivendi, “Tencent and Tencent Music Entertainment will continue to work to broaden artist opportunities and to enrich experiences for music fans, further promoting a thriving music and entertainment industry”.

The transaction is complemented by a separate agreement signed on March 31, 2020, allowing Tencent Music Entertainment to acquire a minority stake in the capital of UMG’s subsidiary Greater China operations.

Vivendi re-confirmed that it is “pursuing its plan to sell additional minority interests in UMG with the assistance of several mandated banks”, and that an IPO for UMG is planned “at the latest in 2022”.

Vivendi said it may use the cash generated by the Tencent consortium transactions to reduce its financial debt and to finance
share buybacks and acquisitions.Music Business Worldwide