Vivendi plans to spin out Common Music Group, its greatest enterprise, and distribute 60 per cent of the group’s share capital to its traders by 12 months finish because it strikes to capitalise on the rising worth of music belongings.
If accredited by shareholders at a vote in late March, the divestment will result in the world’s greatest music firm, which is dwelling to pop stars together with Girl Gaga and Kanye West, to be an impartial firm through which Vivendi would solely personal a 20 per cent stake.
It will additionally give the French media group managed by billionaire Vincent Bolloré extra firepower to make acquisitions in different areas comparable to publishing, tv, and communications.
As soon as Vivendi spins out UMG, its remaining companies will probably be a lot smaller and largely targeted on France with pay-TV operator Canal Plus, communication company Havas, cellular video games writer Gameloft, and e-book writer Editis. In 2019, UMG accounted for 45 per cent of Vivendi’s €15.9bn in gross sales, and 73 per cent of its working revenue of €1.5bn.
Vivendi laid out the plan in a press release on Saturday, and stated the board had set a “minimal goal of €30bn” of valuation for UMG. Chinese language group Tencent had in late January exercised its possibility to purchase an additional 10 per cent of UMG at that valuation, taking its whole stake to twenty per cent.
“The transaction accomplished in latest days on that foundation . . . in addition to pursuits expressed by different traders at doubtlessly greater costs, have now enabled the administration board to think about a distribution of 60 per cent of UMG’s share capital to Vivendi shareholders,” stated Vivendi.
Vivendi shareholders would get an “distinctive distribution” within the type of the brand new UMG shares, which might then be listed in Amsterdam the place the corporate can be included.
The announcement appears prone to finish years of hypothesis over what Bolloré would do with Common. The billionaire rebuffed a proposal from SoftBank for UMG price €6.5bn again in 2013. After having thought-about itemizing UMG on public markets in 2017, Vivendi dominated it out in 2018 and stated it might look to promote as much as half the corporate, paving the way in which for the Tencent deal.
When smaller rival Warner Music went public last June at an nearly $16bn valuation, it confirmed that public market traders had urge for food for music labels. Since then, Warner’s market capitalisation has risen to $19.2bn.
The worth of music firms has soared in latest years as streaming companies like Spotify revived the trade, reaping billions in royalty funds to music labels. The trade’s “huge three” labels — market chief Common, Sony Music and Warner Music — management practically 80 per cent of the market, which is forecast to greater than double by 2030 to achieve $45bn, in response to Goldman Sachs.
In a message to staff, board chairman Yannick Bolloré and Vivendi chief govt Arnaud de Puyfontaine, stated the plan would “mark a brand new part” for each Vivendi and UMG.
“UMG can be ready to reap the benefits of significantly elevated monetary flexibility to pursue its dynamic progress and its pioneering position within the music and leisure trade, to the good thing about artists and followers in every single place,” they wrote.