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Tencent acquires U-Live stake with UMG buy-in

Vivendi has finalised its sale of 10% of Universal Music Group to a consortium led by China's Tencent, which has an option to buy a further stake in the next 12 months

By IQ on 01 Jan 2020

Tencent Music CEO Cussion Pang

Tencent Music CEO Cussion Pang


image © Tencent Music Entertainment

Vivendi and a consortium led by Tencent, the Chinese tech and entertainment giant, have finalised the consortium’s acquisition of a 10% stake in Universal Music Group (UMG), concluding talks than began last summer.

The acquisition values UMG at €30 billion, with members of the consortium including Tencent Holdings Ltd, Tencent Music (often referred to as ‘China’s Spotify’) and “certain global financial investors”, according to a joint statement.

The consortium has the option to purchase an additional up-to-10% stake in UMG at the same ‘enterprise value’ (the value of the whole company; ie €30bn) before 15 January 2021, while Tencent Music also has the option to acquire a minority stake in UMG’s business in so-called ‘Greater China’ (the PRC, including Hong Kong and Macau, plus Taiwan).

Pending regulators’ approvals, the transaction is expected to complete by the end of June 2020.

“Vivendi is very happy with the arrival of Tencent and its co-investors. They will enable UMG to further develop in the Asian market,” reads a statement from UMG’s French parent company, Vivendi.

“Together with Vivendi, Tencent and TME will work to broaden the opportunities for artists and to enrich experiences for music fans”

Tencent adds: “Tencent and the Consortium members are excited to support UMG’s growth through this investment.

“Together with Vivendi, Tencent and TME [Tencent Music Entertainment] will work to broaden the opportunities for artists and to enrich experiences for music fans, further promoting a thriving music and entertainment industry.”

The acquisition of a 10% share of UMG also gives Tencent a stake in U-Live, Universal Music’s live music arm, whose UK festival stable includes Love Supreme, the Long Road, Sundown and Nocturne.

UMG grew its revenues 17.5% in the nine months ending September 2019, the most recently available financial results, to over €5 billion (€1.8bn in Q3), bolstered by strong merchandise revenues and the success of artists including Ariana Grande, Taylor Swift and Billie Eilish.

Universal reports merchandise boom in 2019

Tencent – which, in addition to its music interests, leads the world in social media and videogaming – turned over CN¥312.7 billion (€40.2bn) in 2018, and employs nearly 60,000 people.

 


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