Vivendi plans to sell Universal Music Group, its largest activity, and to distribute 60% of the group’s capital to its investors by the end of the year as it evolves. at capitalize on the growing value of musical assets.
If approved by shareholders in a vote at the end of March, the divestment will lead the world’s largest music company, home to pop stars such as Lady Gaga and Kanye West, to become an independent company in which Vivendi does not. would hold that 20% stake.
It would also give more to the French media group controlled by billionaire Vincent Bolloré firepower to make acquisitions in other fields such as publishing, television and communications.
Once Vivendi launches UMG, its remaining activities will be much smaller and largely focused on France with pay-TV operator Canal Plus, communications agency Havas, mobile game publisher Gameloft and publisher of Editis books. In 2019, UMG represented 45% of Vivendi’s € 15.9 billion in revenue and 73% of its € 1.5 billion operating income.
Vivendi presented the plan in a statement on Saturday, and said the board had set a “minimum target of € 30 billion” for UMG’s valuation. The Chinese group Tencent had exercised at the end of January its option to purchase an additional 10% of UMG at this valuation, bringing its total stake to 20%.
“The transaction has been completed in recent days on this basis. . . as well as the interests expressed by other investors at potentially higher prices, have now enabled the management board to consider a distribution of 60% of UMG’s capital to Vivendi shareholders, ”said Vivendi.
Vivendi shareholders would benefit from an “exceptional distribution” in the form of new UMG shares, which would then be listed in Amsterdam where the company would be incorporated.
The announcement should end years of speculation about what Bolloré would do with Universal. The billionaire rejected an offer from SoftBank for UMG worth € 6.5 billion in 2013. After considering listing UMG on the public markets in 2017, Vivendi excluded it in 2018 and said that he would seek to sell up to half of the business, paving the way for the Tencent deal.
When the smallest rival Warner Music went public Last june at a valuation of nearly $ 16 billion, it showed that public market investors had an appetite for music labels. Since then, Warner’s market cap has grown to $ 19.2 billion.
The value of music companies has skyrockets In recent years, streaming services like Spotify have revived the industry, collecting billions in royalties from music labels. The industry’s “big three” labels – market leader Universal, Sony Music and Warner Music – control nearly 80% of the market, which is expected to more than double by 2030 to $ 45 billion, according to Goldman Sachs .
In a message to employees, the chairman of the board of directors Yannick Bolloré and the managing director of Vivendi, Arnaud de Puyfontaine, declared that this plan “would mark a new phase” for Vivendi and UMG.
“UMG would be able to take advantage of significantly increased financial flexibility to continue its dynamic growth and pioneering role in the music and entertainment industry, to the benefit of artists and fans around the world,” they said. written.