Business News Digital Labels & Publishers

Tencent in talks to buy Warner stock ahead of the major’s IPO

By | Published on Monday 1 June 2020


If you wondered whether Tencent taking an equity stake in Universal Music might impact on its exclusivity deals within home country China with rival majors Warner Music and Sony Music, well, why doesn’t Tencent just also take equity stakes in those other majors too? Simple.

With that in mind, the Wall Street Journal reported on Friday that Tencent is likely to grab itself some Warner Music stock ahead of the mini-major’s Initial Public Offering this week.

It’s thought that Tencent is one of a number of so called anchor investors being courted by current Warner Music owner Access Industries. Those are entities that are invited to commit to buy shares ahead of an IPO, the hope being that those commitments will boost confidence among other investors regarding the stock market listing and, in doing so, boost demand for shares and therefore increase the share price.

Access Industries announced its intent to sell a slice of Warner Music via an IPO earlier this year. Those plans got delayed by the COVID-19 shutdown, but last week Access formally launched the share sale. It will put 14% of the music company’s stock up for sale with a target price of $23 to $26 per share, which would value the wider Warner Music Group at $11.7 billion.

Chinese web giant Tencent is the market-leader digital music company in China via its Tencent Music subsidiary. It also has interests in other music businesses, operating the Joox streaming platform outside China, having an equity interest in Spotify and leading the consortium that bought 10% of Universal Music at the end of last year.