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Tencent-led group clinches deal for 10pc of Vivendi’s Universal Music

  • The deal values Universal Music, the world’s biggest music company, at US$33.6 billion
  • Tencent and its partners may raise their stake to as much as 20 per cent before January 15, 2021

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Internet giant Tencent Holdings could bring Universal Music Group, the world’s biggest music company, closer to consumers in Asian markets that are relatively underserved by major music labels. Photo: AP
Bloomberg

A consortium led by China’s Tencent Holdings agreed to buy 10 per cent of the world’s biggest music company, Universal Music Group, from Vivendi, after months of talks.

The deal values Universal Music at 30 billion euros (US$33.6 billion) and allows Tencent and its partners to increase the stake to as much as 20 per cent for the same price before January 15, 2021, the companies said in statements on Tuesday.

With the Chinese social media and gaming giant now officially on board, other potential investors may look at Universal Music. That would energise a sale process that seemed to be dragging along since Vivendi first announced plans to sell as much as half the business in July 2018.

Negotiations will now begin over the potential sale of a further minority stake at a price “which would at least be identical” to the deal with Tencent, Vivendi said. Shares of Vivendi rose 0.4 per cent as of 12:08pm in Paris.

A woman walks pass by a sign of Vivendi at the main entrance of the entertainment-to-telecommunications conglomerate’s headquarters in Paris on November 21. Photo: Reuters
A woman walks pass by a sign of Vivendi at the main entrance of the entertainment-to-telecommunications conglomerate’s headquarters in Paris on November 21. Photo: Reuters

Vivendi is cashing in on a boom in subscription music streaming that’s inflated the value of its back catalogue and a roster of stars including Taylor Swift, U2, Drake and Post Malone. Record company sales have jumped by an average 7 per cent annually since 2014 and streaming has become the industry’s biggest source of revenue.

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