Vivendi concluded Tuesday the sale of a 10% stake in Universal Music Group (UMG) – home to Taylor Swift and The Beatles – to a Tencent-controlled coalition, in a deal giving UMG an enterprise value of 30 billion euros ($33 billion).
The French group, in which billionaire Vincent Bollore’s holding firm has the biggest stake, said it will now look at the possible sale of other minority pursuits in UMG, with an initial public offering of those assets planned for early 2023.
The previously announced deal permits both corporations to expand in a recovering global music sector. It gives Tencent more access to U.S. artists, while UMG can tap into the Asian marketplace, along with big-selling “K-Pop” Korean pop stars.
Although Tencent Music’s user base is almost three times that of Spotify Technology, it has fewer paying users.
Earlier this month, Tencent Music Entertainment Group cautioned it would likely see “much softer” first-quarter revenue growth because of the COVID-19 pandemic.
The Tencent coalition has the option to purchase an additional as much as 10% of UMG’s share capital on the same valuation foundation until January 15 in 2021.
Tencent Music Entertainment will also be able to acquire a minority stake of UMG’s unit housing its Greater China operations.
Vivendi stated it plans to make use of the proceeds from the transactions for substantial share buyback plans and acquisitions.