With hours to go, the music enterprise is closing out 2019 with huge information: Universal Music Group, the most important report firm on this planet, has offered a 10% stake — with a risk of 10% extra — to a consortium led by Chinese language tech and leisure big Tencent.
The $3.Three billion deal values Common — which boasts stars like The Beatles, Kanye West and Taylor Swift in its roster — at round $34 billion. Underneath the phrases, Tencent is allowed to extend its stake to as a lot as 20% by January 2021 if it desires, and Tencent may also take a minority stake in UMG’s China operations.
In a press launch Tuesday morning, Common’s guardian firm Vivendi stated it’s “very glad” with Tencent as a minority stakeholder, which can “allow UMG to additional develop within the Asian market.” The consortium additionally contains different “sure international monetary traders” who haven’t been named, and Vivendi stated individually that it’s contemplating additional gross sales of minority stakes in UMG to different events.
Wall Road has been speculating in regards to the ramifications of a Tencent-Common deal since final summer season, when Vivendi was first rumored to have begun exploring the partial sale of UMG — the objective being to broaden the report firm’s international attain in a time of livid development within the streaming business. (In 2018, international music income development was increased than it’d been within the twenty years prior, indicating a long-awaited turnaround for the music enterprise.) Vivendi confirmed preliminary talks with Tencent earlier this yr.
For Tencent, which already has a 7.5% stake in streaming business chief Spotify, the deal will assist bolster attain into the U.S. and different main territories it hasn’t but explored. For the recorded music industry at giant, the deal alerts one of many largest U.S.-Asia partnerships but — and the chance of extra to return.
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“Aside from extra assets to additional advance our technique, the whole lot else will stay the identical: our strategic imaginative and prescient; our firm, label and enterprise unit names; our areas; and naturally, our excellent individuals,” UMG chief Sir Lucian Grainge stated in a memo to workers on Tuesday morning after the announcement of the UMG-Tencent deal. “That is an thrilling improvement reflecting a robust validation of our enterprise technique, our unbelievable crew and your glorious work. It additionally displays our shared optimism about UMG’s continued function because the driving drive in our business and the way centered we’re on the long run.”