The largest music company in the world finally goes solo, though not to the usual place.
On Saturday, the French owner of Universal Music Group, Vivendi, said she would set aside her music business and list in the Netherlands later this year. He had already addressed the idea of making public the record label he works with Lady Gaga and Taylor Swift in 2022. Investors ’strong appetite for musical assets since the pandemic began could explain the accelerated timetable. The news caused Vivendi’s share price to rise one-fifth on Monday.
Once the derivation is completed, the French company run by billionaire Vincent Bolloré will continue to own a fifth of Universal. Chinese technology giant Tencent will own 20% after recently exercising an option to increase its stake in the music giant to a valuation of 30 billion euros (equivalent to $ 36 billion). The remaining 60% will be given to Vivendi investors in a special distribution.
Shareholders have been pushing for this measure as a way to gain value in the music business for years. Vivendi shares have traded at an average discount of about 10% on their valuation of the sum of the parts since the end of 2017, according to Barclays analysts. Soon, investors will be able to get exposure to Universal directly instead of having to buy shares in the large French conglomerate.
Although live concert organizers suffer during the pandemic, broadcast services have benefited as consumers spend more time listening to music. Spotify increased its monthly active users to 345 million in the fourth quarter of 2020, 27% more than the same period last year. As a result, major record labels such as Universal and Warner are accumulating more copyright from digital music platforms. In the third quarter, Universal’s transmission revenue rose 23%, the fastest growth it has seen since early 2019.