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Vivendi’s UMG stake sale attracts buyers

Vivendi has seen its shares jump today (Friday) after posting impressive third-quarter revenue and stating a potential sale of an additional minority stake in Universal Music Group (UMG) was attracting buyers.

In Q3 of 2019, UMG’s revenues increased by 16 per cent year-on-year to €1.8bn, with group revenues up 7.2 per cent to €3.97bn.

The firm also saw strong performances of live, festivals and ticketing activities through Vivendi Village, which saw revenues ride 50.3 per cent to €108m in the first nine months of 2019.

Ticketing activities are now all grouped under the same See Tickets brand, with ticketing revenues amounting to
€48m over the first nine months of 2019, an increase of 19.5 per cent. This is due in particular to the robust growth of the activities in the Unites States, where revenues doubled in one year.

In August, it was confirmed that Vivendi was in talks with Chinese internet giant Tencent over a potential sale of 10 per cent of the French media conglomerate’s stake in Universal Music Group. The proposed €3bn (£2.8bn/$3.4bn) deal would value the record label at €30bn, with Tencent retaining an option to double its shareholding on the same terms within 12 months.

Vivendi’s investor update today (Friday) said that due diligence on Tencent Holdings’ bid to acquire 10 per cent to 20 per cent of UMG is due to be finalised in the coming weeks.

However, it remains to be seen whether current hostilities directed by the US political establishment towards Chinese investors regarding high-profile strategic assets could complicate the deal.

Vivendi said: “[There is a] continuing process for the potential sale of an additional minority stake in UMG to other partners. Some have already expressed an interest in investing at a similar price level.”

Vivendi said it may use proceeds from the deal “for a significant share buyback program and bolt-on acquisitions”.