Vivendi has finally silenced the speculation – and some doubters – about the sale of a stake in Universal Music Group. A year after the process was first announced, now a strategic partner has been unveiled.
China’s Tencent Holdings (which also controls Tencent Music) is in talks with Vivendi to acquire a 10% stake in the major. The proposed deal would value UMG at €30 billion (£27.6m) and Tencent would have a one-year call option to acquire an additional 10%.
In a note to staff seen by Music Week, CEO/chairman Sir Lucian Grainge has described the move as an “exciting development”.
UMG has already partnered with digital music platform Tencent Music on Abbey Road Studios China. The proposed deal for the Chinese company’s stake in the French-owned, US-based major has come up amid heightened trade tensions between the US and both China and France.
Interestingly, during last month’s earnings call, Vivendi CEO Arnaud de Puyfontaine was asked - speculatively -if that US-China trade row could derail any proposed partnership with a Chinese digital company.
“We intend to sell a minority stake and to keep control of UMG,” he said. “So we do not expect to face those kind of issues.”
Sir Lucian described the company’s streaming-led results – which have enabled Vivendi to cash in on the major’s rising value – as “historic”.
“Our success is driven by placing our recording artists and songwriters at the centre of everything we do and providing them with the industry’s best creative and commercial resources on a global basis,” he wrote.
He added that a tie-up with Tencent meant that the “possibilities to accelerate and broaden our strategy are exciting”.
The full text of the note to UMG staff is below.
Dear Colleagues,
Today Vivendi announced that they have entered into preliminary negotiations with Tencent for an investment of 10% of UMG’s share capital.
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 centre of everything we do and providing them with the industry’s best creative and commercial resources on a global basis.
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.
Clearly, the possibilities to accelerate and broaden our strategy are exciting. But for now, it’s critical that we remain focused on our important work at hand.
Thank you once again for your incredible achievements. As validated by this announcement, our results to date have been historic. As we move forward, we will continue to embrace change and disrupt the traditional business, as we build a bright future for ourselves, our artists and our investors.
Lucian
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