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Tencent and its mates grab another 10% of Universal Music

By | Published on Friday 18 December 2020

Universal Music

Vivendi has announced that the Tencent-led consortium that bought 10% of Universal Music a year ago is grabbing itself another 10%. And just in time for Christmas! Well, not quite. The new deal is subject to regulator approval, but should be completed within the first half of 2021. Just in time for Canada Day!

Vivendi sold 10% of its music business to the consortium led by Chinese web giant Tencent right at the end of 2019, having let it be known it was planning on selling some equity in the Universal Music Group the previous year.

At the time of that first Tencent deal it was confirmed that the consortium also had the option to buy another 10% of Universal down the line at the same price. That option actually expires next month on 15 Jan, which is why they’re taking it up right now. The deal is based on a valuation for the whole of Universal of 30 billion euros.

“Vivendi has enjoyed the presence of Tencent and its co-investors at UMG’s share capital since March and is very happy the consortium has decided to exercise its option”, the French media firm said yesterday, adding that the Tencent tie-up also enables “UMG to further develop its activities in Asia”.

“Tencent and the consortium members are delighted to support UMG’s growth through this additional investment”, the official statement went on. “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”.

Lovely. Vivendi, of course, is also planning on selling off some more Universal equity via an initial public offering by no later than 2022. It confirmed that is still very much the plan yesterday.

And what will Vivendi be doing with all this Universal share sale cash? “The cash generated by these transactions may be used by Vivendi to reduce its financial debt and to finance share buybacks and acquisitions”. What fun.