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Vivendi confirms other parties still interested in Universal stake alongside Tencent

By | Published on Friday 18 October 2019


Vivendi yesterday provided an update on its deal to sell 10% of Universal Music to Chinese web giant Tencent, confirming that the transaction should be finalised in the coming weeks. It also confirmed that talks are still ongoing with other parties interested in taking a minority stake in the world’s biggest music rights company.

The French entertainment conglom first revealed the specifics of its potential deal with Tencent back in August, a year on from it announcing plans to sell a minority stake in its music business.

In an investor update yesterday, Vivendi re-presented the top line figures: the deal values Universal at 30 billion euros, and Tencent will take a 10% stake in the company, with an option to acquire another 10% down the line.

In its update on the transaction, Vivendi said that “due diligence on UMG and negotiation of legal documentation are ongoing and should be finalised in the coming weeks”.

We knew that other parties had also expressed an interest in taking a slice of Universal, and Vivendi added yesterday that those other conversations were also ongoing and that “some have already expressed an interest in investing at a similar price-level”.

As for what Vivendi will do with all the cash generated by these deals, it said “proceeds may be used for a significant share buyback programme and bolt-on acquisitions”. What fun!

The French firm, of course, is seeking to capitalise on renewed interest within investment circles in music rights as the recorded music market continues to grow thanks to the streaming boom.

There remain plenty of risks for big music rights owners, like the fact the streaming sector is dominated by a really small number of loss-making services, and that labels and publishers aren’t securing the same level of rights from their artists and songwriters anymore, and that some landmark cases around the termination right in US copyright law could have a significant impact on the majors’ increasingly important old music catalogues.

But in the short term the stand-out stats coming out of the record industry remain positive, which double digit growth for all the key Universal revenue streams in its latest financial report.