- Tencent Holdings Ltd. has led a deal to buy 10% of Universal Music Group from Vivendi SA for $3.4 billion
China’s Tencent Holdings Ltd. has led a deal to buy 10% of Universal Music Group from French media company Vivendi SA after several months of talks. This deal valued Universal Music Group at 30 billion euros ($33.6 billion). And Tencent and its partners also have the option to increase their stake to as much as 20% at the same valuation until Jan. 15, 2021.
Back in July 2018, Vivendi — which is controlled by its largest shareholder Vincent Bolloré — announced its intent to sell as much as half of Universal Music. And by having Tencent on board, Vivendi may be able to attract more of an interest.
The negotiations will now begin over the potential sale of a further minority stake that would be at a price identical to the deal with Tencent. The popularity of music subscription services has been driving up the value of the catalogs from UMG’s roster of stars, including U2, Lady Gaga, The Beatles, Taylor Swift, and Drake. With Tencent on board, Universal Music Group could also gain better access to markets in Asia.
Tencent did not disclose who the other investors were. But sources with Bloomberg cited Hillhouse Capital and GIC Pte. (Singapore-based sovereign wealth fund) as the potential investor partners who were approached. And Qatar Investment Authority (QIA) is also believed to be involved.
Tencent also has a minority stake in Spotify. Currently, Spotify has 100 million paid subscribers and Tencent Music has 35 million as of the third quarter.
