Takeovers & Buyouts: Tencent-led Consortium Buys 10% of Vivendi-owned Universal Music

January 2, 2020 | Takeovers and Buyouts

Vivendi cashes in on the recovery in the music industry with a stake sale.

Universal Music Group (UMG), the biggest music company in the world, has sold a 10% slice worth $ 3.3 billion to a consortium led by Chinese tech and entertainment behemoth Tencent. By January 2021, Tencent can buy 10% more. Tencent will also get to buy a minority stake in UMG China, according to Reuters.

Sovereign wealth funds pile into the UMG Tencent deal

UMG boasts of music stars Lady Gaga (pictured above), the Beatles, and Taylor Swift. The stake sale values Universal at $ 34 billion. No details are available yet on other members of the Tencent-led consortium, described only as “certain global financial investors.” However, according to Reuters, which quoted a source familiar with the deal, Singapore sovereign wealth fund GIC and the Qatar Investment Authority were involved in the deal.

UMG-Tencent: Vivendi’s strategy

According to Rolling Stone, Vivendi is not done yet with stake sales in UMG, and that transactions with other parties are under consideration.

Vivendi had announced in August 2019 that it had entered into “preliminary negotiations with Tencent Holdings Limited for a strategic investment totaling 10% of the share capital of Universal Music Group (UMG) at a preliminary equity valuation of €30 billion for 100% of UMG on a fully-diluted basis.”

In 2018, the global music business achieved a long-awaited turnaround of sorts. Revenue growth ticked higher than it had ever been in the two previous decades. In 2019, according to the IFPI Federation, music revenues rose 9.7% over 2018.

“With the exception of additional resources to further advance our strategy, everything else will remain the same: our strategic vision; our company, label and business unit names; our locations; and of course, our outstanding people,” said UMG chief Sir Lucian Grainge in a memo to employees.

Deal advantages

The deal allows UMG to access the lucrative Asian market, with K-Pop, or pop music from Korean pop stars becoming highly popular. Meanwhile, Tencent could get a foothold into the US music scene and enter tie-ups with US artists.

Related Story:  With Tencent Backing It, a Virtual Blockchain Bank May Launch Sooner Than You Think

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.

Alt Insights

January 16, 2020

ESG: Lately-turned Tesla Bull Jim Cramer Adds Fink To The Mix

ESG: Lately-turned Tesla Bull Jim Cramer Adds Fink To The Mix

Latest Alternative Investment News

Emission-Free Friday: Here are the Latest Funds to Push for Carbon Neutral
January 17, 2020     ESG and Sustainability, Investments, News

Carbon emissions dominated the headlines this week. The European Commission has announced an ambitious plan to shift toward a green economy and make the EU carbon-neutral in the year ahead….

Kirkoswald Asset Management Will Turn New Investors Away in 2020
January 17, 2020     Hedge Funds, News

Kirkoswald Asset Management will stop accepting new investors when the fund hits nearly $2 billion. Reuters reports that the two-year-old fund will close itself to new investors at the end…

FinTech: Fundbox Hires Former Goldman Sachs Investment Banker as CFO
January 17, 2020     FinTech, Venture Capital

Fundbox, the fintech startup that finances SMEs, is planning a potential IPO. Fundbox has appointed Marten Abrahamsen as its CFO effective this January. Abrahamsen was previously a partner at The…

Hedge Funds: The Empire Strikes Back At HKD Short-Sellers and Doomsayers
January 17, 2020     Hedge Funds, News

Such is the power of Kyle Bass, the hedge fund manager who correctly predicted the crisis from US subprime mortgages in 2007. The Hong Kong Monetary Authority deemed it appropriate…