Tencent Looking To Buy 10% Of UMG
• Chinese digital behemoth Tencent has entered negotiations with Vivendi to buy a 10% stake in Universal Music Group. As reported by Variety, Vivendi announced the talks Tuesday, saying that negotiations were based on a valuation of UMG of $33.6 billion. After a quick bit of mental math, Tencent’s potential 10% stake would cost them $3.36 billion. The deal would also give Tencent a one-year option to purchase another 10% stake of UMG on the same terms.
Tencent is known primarily for its gaming and social network business — it owns China’s powerful WeChat platform, which has 900 million daily users. Tencent also holds a 7.5% equity stake in Spotify, and the company also has its own music unit, Tencent Music Entertainment Group.
Vivendi said the two companies were also exploring other areas of “strategic commercial cooperation” that would help grow UMG, the world’s biggest music company with market share of more than 30% in 2018, through new digital initiatives and territories. Vivendi is continuing to seek other buyers interested in a stake in its music division.
In a letter to the UMG staff, Lucian Grainge, Chairman & CEO of UMG, commented, “This is an exciting development for both Vivendi and UMG and affirms once again just how much our strategy and hard work are succeeding. As Vivendi discussed last week with its investors, we continue to deliver remarkable, record-setting results. Our success is driven by placing our recording artists and songwriters at the center of everything we do and providing them with the industry’s best creative and commercial resources on a global basis.
Grainge continued, “Obviously, we remain part of the Vivendi family — today’s announcement is about a minority investment by Tencent. I can assure you that Vivendi’s Supervisory and Management Boards as well as the Bolloré family continue to be steadfast supporters of our strategy, our work and our teams. And it goes without saying, that our commitment to recording artists and songwriters will continue unchanged.”
