Vivendi looking to sell up to 50% of Universal Music Group
Tencent Music (TME) may be thinking about purchasing a stake in UMG (Universal Music Group), the world’s largest music label and a division of French media conglomerate Vivendi (VIVHY). Vivendi is seeking to sell up to 50% of UMG for ~$45 billion, Reuters reports. Liberty Media (FWONA) also has shown interest in buying a stake in the business, and ome analysts believe that Google (GOOGL) and Amazon (AMZN) may also be interested in purchasing a piece of UMG. Google and Amazon run music streaming services that could benefit from UMG’s song catalog.
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Tencent Music sitting on $2.5 billion in cash
UMG’s large portfolio of music rights makes it an attractive asset for streaming music companies, which could leverage its massive song catalog to enhance their own services. Tencent Music, a unit of Tencent Holdings (TCEHY) before it separated and went public last year, is China’s top streaming music service by subscriber count. In addition to selling music subscriptions on its own platform, Tencent Music licenses its songs to other services. Therefore, UMG, which own a massive portfolio of songs, could be a huge boost to Tencent Music’s song licensing business.
However, given that Tencent Music exited 2018 with just $2.5 billion in cash, it may have to borrow heavily or partner up to raise the ~$45 billion that Vivendi is expected to seek for its UMG stake.