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Vivendi may sell 10% of Universal Music to US investor ahead of stock market listing

By | Published on Wednesday 19 May 2021

Universal Music

Universal Music owner Vivendi yesterday published more information about its plan to spin the music major off as a standalone business and list it on the Dutch stock exchange.

As part of that announcement, it revealed that it could sell a 10% stake in the Universal Music Group to an American investor before the stock market listing.

Vivendi has been looking to cash in on the streaming-caused music rights boom since 2018, of course, by selling off chunks of Universal, the biggest music rights company in the world. That began with a deal with a consortium of investors led by Chinese web giant Tencent, which ultimately acquired 20% of the UMG business. Then in February 2020 the stock market listing plan was confirmed.

Said plan was then fleshed out somewhat in February this year. The standalone Universal Music Group will be listed on the Euronext stock exchange in the Netherlands, a country that was previously home to Polygram, one of the forerunners of UMG back in the day.

As part of that process, 60% of the stock in the newly standalone Universal will be distributed to Vivendi’s current shareholders, who can then sell or hold on to those shares. Which will mean Vivendi itself keeping 20% of UMG, with the aforementioned Tencent consortium owning the other 20%.

However, in yesterday’s update Vivendi revealed that it may well sell half of its 20%. “Prior to the distribution of 60% of the UMG shares to Vivendi shareholders, the group is analysing the opportunity of selling 10% of UMG shares to an American investor”, it said.

Vivendi specifying that any pre-listing share sale will involve an “American investor” suggests that talks are already underway with a specific US company regarding that deal. Though, if said deal falls through, Vivendi added that it might still sell up to half of its 20% on the stock market.

However, whatever happens, “Vivendi will retain 10% of the UMG share capital for a minimum period of two years in order to remain associated with the development of its subsidiary while benefiting from the protection of EU legislation applicable to parent companies and subsidiaries from different member states”.

Vivendi also published information about its plans for the board of the all-new UMG business, which will consist mainly of independent non-executive members. Neither Vivendi nor its biggest shareholder Group Bolloré are seeking board representation at this stage.

With the distribution of 60% of Universal stock to Vivendi shareholders, Group Bolloré – the corporate group of Vincent Bolloré – will become the second biggest shareholder in the standalone music company, controlling 16% of the business, behind the Tencent consortium at 20% – assuming Vivendi does sell some of its 20% of course.

Although, given that Group Bolloré also basically controls Vivendi, it will actually control at least 36% of the music firm’s stock.