Vivendi has confirmed that the Tencent-led consortium has taken up its option to acquire a further 10% share in UMG.
The deal values UMG at €30 billion (£27.2bn), although the Tencent option was on the same price basis as the previous 10% stake (as long as it was agreed by January 2021).
The Tencent-led consortium’s acquisition for the first 10% share in the major was announced this time last year. The deal concluded in March.
The announcement follows a strong performance by UMG so far this year during the pandemic.
Closure of the latest deal and payment will take place during the first half of 2021, subject to regulatory approvals.
In a statement, Vivendi said: “Vivendi has enjoyed the presence of Tencent and its co-investors at UMG’s share capital since March and is very happy the consortium has decided to exercise its option. They will enable UMG to further develop its activities in Asia.
“Tencent and the consortium members are delighted to support UMG’s growth through this additional investment. Together with Vivendi, Tencent and Tencent Music Entertainment will continue to work to broaden artist opportunities and to enrich experiences for music fans, further promoting a thriving music and entertainment industry.”
A separate agreement has enabled Tencent Music Entertainment to acquire a minority stake in the capital of the UMG subsidiary owning its Greater China operations.
Vivendi is pursuing its plan to sell additional minority interests in UMG with the assistance of several mandated banks. An IPO is planned at the latest in 2022.
The cash generated by these transactions may be used by Vivendi to reduce its financial debt and to finance share buybacks and acquisitions.
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