News March 1, 2019

Report: Informal discussions for Vivendi’s half of Universal Music could reach €20b

Staff Writer
Report: Informal discussions for Vivendi’s half of Universal Music could reach €20b

Universal Music Group parent will in March start choosing a number of banks to negotiate the best deal to sell off 50% share.

Negotiations were to begin in Q2 with the deal done and dusted by the end of 2019.

But there’s a great deal of interest in the sale, for two reasons.

Some want to specifically get a slice of Universal, the world’s largest record company, which last year generated revenues of €6.023 billion (A$9.61 billion) and €902 million ($1.43 billion) EBITA.

Others want to get involved in the multi-billion dollar music industry, which is now in growth thanks to streaming.

In the month of January alone, analysts hopscotched UMG’s value, from €29 billion or $46.2 billion by Deutch Bank, €35 billion or $55.8 billion by Goldman Sachs at and €44 billion ($70.2 billion) by JPMorgan.

Sources told Reuters that informal discussions have already begun… and the deal could potentially be worth €20 billion ($31.9 billion).

Among the main suitors, according to the report, are China’s Tencent Music Entertainment Group, a subsidiary of China’s biggest gaming and social media firm Tencent Holdings Ltd.

Tencent already has a licensing agreement with Universal and wants to strengthen the relationship.

But the obstacle there is that Vivendi CEO Yannick Bollore wants the partner(s) to bring in money so his company can expand internationally but does not want to the partner to have any say in UMG’s daily decision making.

However private equity funds could be content with getting into the music industry without any interest in the nuts and bolts.

One of them is the US firm KKR who is also mentioned as one of the more eager suitors.

KKR lucked in with its first venture into music, getting into bed with music rights management company BMG.

When KKR sold back its stake back in 2013 to BMG parent Bertelsmann, Europe’s largest media company, it doubled its investment.

Liberty Media is another also seen as eager to do a peacock courtship dance.

It’s growing to be a massive entertainment powerhouse with ownership of SiriusXM and Pandora and around 35% of Live Nation.

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