Tencent Music Acquires 5% of Warner Music Group Class A Shares — $100MM+ Investment

Tencent Warner Music
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Tencent Warner Music
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Photo Credit: Tencent

Tencent Music, a subsidiary of Chinese conglomerate Tencent, has acquired approximately 5.2 percent of Warner Music Group’s Class A shares.

Tencent Music’s substantial investment was revealed in a Securities and Exchange Commission (SEC) filing, which Digital Music News obtained early this morning.

Investors are required to disclose their stock purchases to the SEC when the shares equal or exceed five percent of those offered by the company. As WMG’s offering consists of 77 million shares, Tencent’s four-million-share investment comprises about 5.194 percent of all available stock.

This filing is dated June 3rd – when Warner Music Group returned to the stock market after being taken private by Access Industries in 2011 – but the document doesn’t identify the precise value of Tencent’s investment.

Based upon WMG’s opening-day performance on Wall Street, the four million shares in question cost a minimum of $100 million (at WMG’s IPO price of $25) and as much as about $120 million (the stock gained roughly 20 percent of its value out of the gate), depending upon when exactly Tencent submitted the purchase order.

Prior to WMG’s return to the public market, rumors circulated that Tencent would seek to purchase a piece of the company. Moreover, the Shenzhen-based brand closed a $3.3 billion deal with French conglomerate and Universal Music Group (UMG) parent company Vivendi earlier this year, in exchange for a 10 percent ownership stake in UMG.

Reports also emerged that the Kingdom of Saudi Arabia would seek out a portion of Warner Music Group, but thus far, the Middle Eastern state hasn’t done so. In late April, the country’s Public Investment Fund dropped $500 million on a 5.7 percent stake in leading concert promoter Live Nation.

At the time of this writing, Warner Music Group’s shares were trading for $30.66 apiece – 76 cents above yesterday’s closing price. Tencent Music (bought and sold under the symbol TME), for its part, was down more than 2.25 percent on the day, to $12.12 per share.

One Response

  1. TruthToPower

    Can you do an article on how Tencent is owned by CCP? The CCP is the enemy of democracy, look at Hong Kong. How do you as journalists let this slide? You are under a moral imperative to expose Tencent as CCP front! They are killing democracy everywhere. You would not be able to run a news site in China.