Ahead of the much-anticipated Universal Music Group IPO, French conglomerate Vivendi is considering selling another 10 percent stake in the Big Three record label to an unidentified “American investor.”
Update, June 3rd: It now appears that Universal Music Group is being eyed by William Ackman SPAC Pershing Square Tontine Holdings at a valuation north of $40 billion. More details here.
The following is our original coverage of the potential deal rumblings in May.
Vivendi – which previously sold one-fifth of Universal Music Group to Tencent for €6 billion – revealed the possible sale of another 10 percent UMG stake (as well as several other interesting points) today, via a formal release.
In short, the Paris-headquartered entity “is analyzing the opportunity of selling 10% of UMG shares to an American investor.” However, the text doesn’t identify this party or specify whether the transaction will bring with it the same €3 billion ($3.67 billion at the present exchange rate) price tag as the aforementioned Tencent deal.
And as an alternative to closing an agreement with said “American investor,” the publicly traded Universal Music owner (VIV on the Euronext Paris) is weighing the possibility of “initiating a public offering of at least 5% and up to 10% of UMG shares” prior to distributing 60 percent of UMG shares to its shareholders.
Next, Vivendi also stated in the release that Universal Music Group shares will make their way onto the Euronext Amsterdam by Monday, September 27, 2021 “at the latest.” The UMG IPO was originally expected to arrive by 2021’s conclusion and, after that, sometime during fall – though the happening is now a maximum of 132 days away.
In terms of what prompted Vivendi to select the Euronext Amsterdam for UMG’s IPO, the Havas owner in February described the Netherlands as “a country which has been one of UMG’s historical homes.”
Lastly, Vivendi is set to propose – “subject to Tencent’s and the members of its Consortium’s approval” – that the publicly traded UMG’s board of directors consist “primarily of non-executive members, a majority of whom will be independent.”
During shareholder meetings, investors “will be free to elect directors in accordance with the majority conditions provided by law,” per the outlined proposal. And “at this stage,” neither Vivendi itself nor Group Bolloré (which owns and controls a substantial portion of Vivendi) “intend to be represented” on the board.
UMG investors will receive one vote per share, the text continues, and “no preferred shares nor any other multiple voting rights will be exercised.” Similarly, a “poison pill mechanism” won’t be implemented, and a term limit of two business years will apply to all board members.
It also bears reiterating that Vivendi intends to distribute 60 percent of UMG shares to its investors in the form of a “special dividend,” with 20 percent of the label belonging to Tencent and another 10 percent up for sale to an American investor, once again.
But Vivendi plans to retain the remaining tenth of “UMG share capital for a minimum period of two years in order to remain associated with the development of its subsidiary while benefiting from the protection of EU legislation applicable to parent companies and subsidiaries from different Member States.”
Vivendi shares finished at $36.09 apiece when the market closed today – not far from their all-time high per-share worth of $37.23. Universal Music Group reported Q1 2021 earnings growth in April, and Warner Music Group – which returned to the stock market about one year back– last week revealed plans to begin distributing an almost $62 million quarterly dividend.