Tencent-led consortium acquires 10% stake in UMG for £2.5 billion

Tencent-led consortium acquires 10% stake in UMG for £2.5 billion

Vivendi has agreed the sale of a 10% stake in Universal Music Group to a consortium led by Tencent Holdings for €3 billion (£2.55bn). 

In a memo seen by Music Week, UMG CEO/chairman Sir Lucian Grainge described the deal as an “exciting development reflecting a strong validation of our business strategy”.

The deal was signed today (December 31), five months after parent Vivendi selected Tencent as a strategic partner. The consortium has the option to acquire an additional 10% at the same price basis by January 15, 2021.

As well as the main Tencent Holdings deal, a second agreement will allow Tencent Music Entertainment to acquire a minority stake in UMG’s Chinese subsidiary.

The transaction is expected to be completed by the end of the first half of 2020, following its submission to regulators. IMPALA has already announced its opposition to the UMG-Tencent deal.

In a statement, Vivendi said: “Vivendi is very happy with the arrival of Tencent and its co-investors. They will enable UMG to further develop in the Asian market.

“Tencent and the Consortium members are excited to support UMG’s growth through this investment. Together with Vivendi, Tencent and Tencent Music Entertainment will work to broaden the opportunities for artists and to enrich experiences for music fans, further promoting a thriving music and entertainment industry.”

Negotiations are also beginning concerning the potential sale of an additional minority share in UMG, so other investors could be in the frame.

Here’s the memo in full from Sir Lucian Grainge:

Dear Colleagues,

I wanted to write you directly to highlight today’s announcement from Vivendi of a successful investment in Universal Music Group by a consortium led by Tencent.

Details are included in the below press release, but they are essentially in line with Vivendi’s prior statements on this matter: the consortium of investors will purchase 10% of the share capital of UMG with UMG’s full enterprise value set at €30 billion. Vivendi also announced that the Tencent-led consortium has the option to acquire up to an additional 10% of UMG’s shares by January 15, 2021, as well as a second agreement that allows Tencent Music Entertainment to acquire a minority of a UMG subsidiary company that includes our operations in Greater China.

With the exception of additional resources to further advance our strategy, everything else will remain the same: our strategic vision; our company, label and business unit names; our locations; and of course, our outstanding people.

This is an exciting development reflecting a strong validation of our business strategy, our incredible team and your excellent work. It also reflects our shared optimism about UMG’s continued role as the driving force in our industry and how focused we are on the future.

I will continue to keep you appraised of any further developments. In the meantime, thank you again for all you do.



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