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Universal Music Group plans IPO

Posted on: Friday 14th of February 2020

French media conglomerate Vivendi said on Thursday it planned to list its most-prized asset, Universal Music Group, by early 2023 at the latest, following a year of record profit for the division.

An IPO – Initial public offering or stock market launch – is a type of public offering in which shares of a company are sold to institutional investors and usually also (a potion) to retail investors. Vivendi recently sold 10% of UMG to a consortium led by Tencent Holdings for $3.3 billion, a sum that values the company at a whopping $33 billion (as reported in Resolution V18.7).

“Vivendi is very happy with the arrival of Tencent and its co-investors,” that segment of the announcement reads. “In addition, Vivendi’s Supervisory Board was informed of ongoing negotiations regarding the possible sale of additional minority interests, which negotiation engagement, based on a minimum valuation of €30 billion, was announced on December 31, 2019. Eight banks have been mandated by Vivendi to assist it in this matter. An initial public offering is currently planned for early 2023 at the latest.”

Since it announced plans to sell up to 50% of UMG in 2018, Vivendi has pursued its concept to take advantage of music’s resurgent revenue growth. It said at the time of Tencent’s investment that the Chinese mega-corporation had an option to acquire another 10% by January 2021.

UMG, helmed by chairman/CEO Lucian Grainge since 2011, is the world’s largest music company. In August of 2017, Goldman Sachs valued UMG at $23.5 billion — $10 billion less than it was valued 18 months later, and roughly three times what it was said to be worth in 2013.

One week ago, UMG rival Warner Music Group announced that it has filed for a proposed initial public offering of its common stock. WMG, which was a public company under previous owners, went private in 2011 when Len Blavatnik’s Access Industries bought the company for $3.3 billion. WMG, along with UMG and Sony Music, are the triumvirate of “major labels”.

Music publishing has also seen unprecedented values in recent years, with Concord purchasing Imagem for $600 million in 2017, Round Hill Music acquiring Carlin for $240 million in 2018 and Songs Music Publishing selling to Kobalt for a reported $150 million.

The IPO news complemented a very strong 2019 earnings report for UMG, which saw its revenues reaching more than $7.7 billion, up 14% thanks to a 21.5% surge in streaming income. Recorded music revenues climbed 11.5% over the last year, and the company’s publishing revenues increased 9.2%. Its merchandise and other revenues grew nearly 74% over last year, due to growing numbers in touring and direct-to-consumer sales. For the fourth quarter of 2019, the company brought in nearly $2.3 billion in revenue, up from $2.06 billion in Q4 of 2019.



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