Tencent in talks to buy stake in Universal Music, label behind Lady Gaga, Ariana Grande, Bruce Springsteen
- Vivendi, Universal Music’s parent, has been looking to sell up to 50 per cent of the business
- Transaction would value Universal Music at US$33.6 billion
Chinese technology giant Tencent Holdings is in preliminary talks to buy a 10 per cent stake in Universal Music Group (UMG), which counts Lady Gaga, Lana Del Rey and Taylor Swift among its artists, French media conglomerate Vivendi said on Tuesday.
The transaction, if completed, will value the music label at €30 billion (US$33.6 billion). Tencent will have a one-year call option to acquire an additional 10 per cent at the same price and terms, Vivendi said.
The acquisition is expected to bolster Shenzhen-based Tencent’s bet on the growth of music streaming in China. Tencent Music Entertainment, its streaming arm, already boasts the country’s biggest music library with more than 20 million tracks through licensing deals with major music labels home and abroad, including Sony Music Entertainment, UMG, Warner Music Group and others.
“Vivendi and Tencent are also concurrently considering areas of strategic commercial cooperation,” Vivendi said in a statement. “In this context, Vivendi is keen to explore enhanced cooperation which could help UMG capture growth opportunities offered by the digitalisation and the opening of new markets.”
The talks come just over two years after Tencent entered a licensing agreement with UMG to distribute its roster of global recording stars on Tencent streaming platforms QQ Music, Kugou and Kuwo.
Tencent spun off Tencent Music Entertainment in a US$1.1 billion initial public offering in New York in December. It retains a majority stake in the music streaming business.
The discussions come just over a year after Vivendi, the Paris-based conglomerate, said it was exploring the sale of up to 50 per cent of its UMG business, which has a music catalogue that stretches from Adele and Bruce Springsteen to Justin Timberlake and Jack White.
The transaction is subject to due diligence and finalisation of legal documents. Shares of Tencent declined 1 per cent to HK$337.20 in Hong Kong on Tuesday.