Tencent gets into global groove with stake in Vivendi’s Universal
The IFPI federation said in April that global recorded music revenues had risen 9.7% in 2019 from last year, while Universal was Vivendi’s main third quarter sales growth driver, with revenues rising nearly 16% to 1.8 billion euros.
“Universal has been enjoying increased revenues for the last 5 years. With the company in a strong position, it can make sense to capitalise on the valuation with a minority sale at this point in the growth cycle,” said MB Capital director Marcus Bullus, commenting on the deal.
The tie-up between Tencent and Vivendi builds on a partnership struck two years ago, allowing Tencent to license Universal’s music for distribution over its streaming platforms.
Vivendi shares closed up 0.3%, with the final sale terms in line with earlier guidance from Vivendi.
MB Capital’s Bullus said it was unclear how Vivendi would use the cash and “how this will increase value for existing shareholders now potentially left with cash in their pocket but a smaller stake in a growing cash generating company”.
($1 = 0.8925 euros)