Universal Music valued at $39 billion forward of inventory market debut

Universal Music Group, the world’s greatest label whose lineup options The Beatles and Taylor Swift, was valued at greater than $39 billion on Monday, a day earlier than its large inventory market debut.

The firm is predicated within the US however owned by French media conglomerate Vivendi, which is offloading a majority stake of the profitable unit on Amsterdam’s Euronext index on Tuesday.

Euronext introduced in a press release late Monday that UMG’s floating value is eighteen.50 euros ($21.70) per share, placing its worth at 33.5 billion euros ($39.3 billion).

Vivendi is owned by French billionaire Vincent Bollore, who has positioned himself as a robust right-wing media baron lately.

Although Vivendi will retain a bit of Universal Music, it’s trying to focus extra on TV, promoting and publishing.

Universal Music, like its rivals Warner and Sony, was as soon as threatened by music piracy however earnings have soared within the age of streaming.

It is house to lots of the world’s greatest music stars, from Lady Gaga to Kanye West to Metallica.

Last yr the group purchased Bob Dylan’s total track catalogue for $300 million, one of many greatest acquisitions in music historical past.

Crown jewel

Based in Santa Monica, California, UMG has been the crown jewel of Vivendi’s media empire, with a turnover of seven.4 billion euros final yr, accounting for 46 % of the parent company‘s income.

But because it pivots in the direction of different areas, Vivendi has already offered off a 20 % stake of Universal to Chinese tech agency Tencent and 10 % to US financier Bill Ackman.

“We are creating the conditions so that the valuation of Vivendi as a whole is greater than the sum of the parts that compose it,” stated Vivendi chief government Arnaud de Puyfontaine.

Aware that shedding its primary asset may be a dangerous transfer, Vivendi has taken steps—described as “quite extraordinary” by one activist shareholder—to guard its personal share value.

It has secured settlement from its buyers for a large buyback of as much as half its shares following the UMG flotation.

That will give the agency bulging coffers with which to guard itself from a hostile takeover bid ought to its share value fall as anticipated following the sale.

Still, Vivendi “will have to show that there are real synergies” to justify its valuation after the sale of UMG, stated analyst Thomas Coudry of Bryan Garnier & Co.

Four million songs

Vivendi will distribute 60 % of UMG shares to its buyers within the floatation whereas hanging on to 10 % and sustaining a joint-management settlement with Tencent.

Bollore will stay a robust determine at UMG, taking 18 % of the floated inventory, value round six billion euros, and a seat on its new board.

UMG, in the meantime, is not only relying on its music to thrive after it goes public.

A prospectus for the IPO says UMG’s three predominant working companies are recorded music, music publishing and promoting, however that it’s also increasing into areas equivalent to stay occasions, livestreaming, movie, tv and podcasts.

More than half of UMG’s document music income got here from its huge again catalogue of music (outlined as greater than three years previous), whereas 46 % got here from new releases.

UMG’s international publishing catalogue accommodates 4 million titles.

With a broad vary of frontline labels and diversification of income streams, the prospectus says, “UMG is not reliant on one artist, or on a small number of artists, to generate revenue in any given year.”

UMG’s prime 50 artists accounted for simply 23 % of its recorded music income final yr, and no single artist represented multiple %.

© 2021 AFP