Tencent-Led Investment Consortium to Acquire 10% of Universal Music Group
- A Tencent-led investment group has agreed to purchase 10% of the Universal Music Group.
- The 10% acquisition deal is set to be complemented by a second agreement that would allow Tencent Music Entertainment to acquire a minority share of an undisclosed UMG subsidiary.
- The deal is expected to close by the end of the 1H 2020.
A Tencent-led investment group, including Tencent Music Entertainment and other investors, has agreed to purchase 10% of the Universal Music Group (UMG) from the French firm Vivendi.
According to a statement from Vivendi, the group also has the option to extend its acquisition up to 20% of UMG’s share capital until January 2021. The deal values the music label at approximately $33.7B USD (€30B).
Additionally, the 10% acquisition deal is set to be complemented by a second agreement that would allow Tencent Music Entertainment to acquire a minority share of an undisclosed UMG subsidiary that has its operations base in China.
Previously, Tencent has entered into music distribution deals with entities such as Sony Music Entertainment, Warner Music Group, and South Korea’s YG Entertainment. YG Entertainment manages K-pop artists Blackpink and Big Bang.
The deal would give Tencent considerably more access to Western music inventories with artists such as U2 and Taylor Swift.
Vivendi is bullish on the Asian market and says it has plans to use the new investment capital to continue to develop its presence there.
The deal is expected to close by the end of the 1H 2020. Vivendi also has other suitors with upcoming negotiations in regards to the potential sale of an additional minority share.
The Tencent move could be in response to a Bloomberg related story that sees ByteDance, a Tencent rival, that began testing its new Resso app, a new music app that was launched in India and Indonesia.
Tencent is a major investor in the gaming and esports space with investments in Riot Games, Discord, and Kakao Games, among others. The company has a total equity level of over 356B CNY.
Universal Music Group has been involved in multiple esports-related efforts; in July of 2018 UMG Canada signed a deal with esports organization Luminosity Gaming to cooperate on producing “cross-promotional content.” In August of that same year UMG Europe and event organizer ESL signed a multi-year partnership to promote new music acts to esports audiences through a joint record label called Enter Records, and in November of 2018 that record label signed a deal with German electronic music producer Christian ”TheFatRat” Buttner to release his hit song, “The Chosen One.”
Source: Read Full Article