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Vivendi reveals proposals for Universal Music IPO in the Netherlands this year
By Chris Cooke | Published on Monday 15 February 2021
Good news for anyone wanting a slice of Universal Music. And who wouldn’t want a slice of Universal Music? I’d love a slice of Universal Music. I could use it to prop up my wobbly coffee table. And that dream could now become a reality. The mega-major’s current owner Vivendi has published a proposal to spin the Universal Music Group off as a standalone company and list it on the Euronext stock exchange in the Netherlands.
Vivendi has been looking at ways to cash in on the current interest among investor types in music rights by selling off some of Universal since 2018. Initially, it said it preferred the idea of selling minority stakes in the Universal Music Group to strategic partners, a strategy that led to Chinese web giant Tencent taking 10% of the company at the end of 2019. However, in February last year it announced that an initial public offering of the music major was now on the agenda.
This weekend, having completed its deal to sell another 10% to Tencent, Vivendi published a statement firming up its plans for an IPO this year. The statement said that the Tencent deals, and the accompanying 30 billion euro valuation for the wider Universal Music company, have helped pave the way for plans to sell off more stock to generate a nice big pay day for Vivendi’s investors.
“The Chairman of the management board set a minimum target of 30 billion euros for UMG’s enterprise value”, Vivendi said of its Universal cash in plans. “The transaction completed in recent days on that basis, for 10% of UMG’s share capital, resulting in 20% of the share capital now held by the Tencent-led consortium, as well as interests expressed by other investors at potentially higher prices, have now enabled the management board to consider a distribution of 60% of UMG’s share capital to Vivendi shareholders”.
That would be achieved through the proposed IPO in the Netherlands. “The listing of the shares of UMG, a holding company currently being incorporated in the Netherlands, would be applied for on the regulated market of Euronext NV in Amsterdam, in a country which has been one of UMG’s historical homes”. That alludes to the old Dutch major music company Polygram, which was merged with US-based MCA in the late 1990s to create the Universal Music Group.
Confirming that the Tencent-led consortium that now owns 20% of UMG is supportive of this proposal, Vivendi added that an extraordinary shareholders meeting will now take place at the end of March to allow the IPO and distribution of profits from the share sale to go ahead, with plans to have it all done by the end of the year.
As Vivendi announced all this to its investors on Saturday, the boss of Universal Music, Lucian Grainge, provided an update to the major’s staff around the word.
“I couldn’t be prouder”, he said of the development. “Not only is this a validation of our strategy, our teams, and our unprecedented record of success, it’s a natural evolution in the storied history of our company that will enable our entrepreneurial and creative culture to continue to soar”.
“We’ll continue to drive towards our strategic goals – full steam ahead”, he added. “We’ll remain committed to our artists and songwriters. And we’ll continue to innovate and help lead the music community towards an incredible next chapter”.
And who doesn’t love a next chapter? Of course, the opening section of that next chapter will involve Vivendi shareholders having a nice big payday, watched by an artist and songwriter community that’s already increasingly critical about the majors cashing in on the streaming boom while COVID-hit creators struggle. Which could be interesting.
Nevertheless, as Grainge has “said many times”, the good old Universal Music Group will “stay true to our mission: harnessing our collective talents and resources to shape culture through the power of music. When, in collaboration with artists, we come together as a company, what we can achieve is truly remarkable”. Hurrah!
