A consortium led by Chinese technology giant Tencent Holdings has struck a $3.36bn (£2.55bn/€3bn) deal to acquire a 10% stake in Universal Music Group (UMG) from media company Vivendi.

Tencent has an option to acquire an additional 10% in UMG at the same price by January 15, 2021.

UMG chief executive and chairman Sir Lucian Grainge confirmed the agreement was signed on December 31 in a memo to staff. In the memo, which was reported by Music Week, Grainge described the transaction as an “exciting development reflecting a strong validation of our business strategy”.

The agreement, which values UMG at €30bn, was finalised five months after Vivendi selected Tencent as a strategic partner. In August, Vivendi confirmed that talks were ongoing over a possible sale of a 10% stake in UMG to Tencent.

When the deal was first mooted, Vivendi said that it would help the company to advance the promotion of UMG’s artists in China.

However, the deal will primarily give UMG the opportunity to accelerate its growth in Asia, especially with the growth of competitor TikTok having provided a headache in recent months.

“Vivendi is very happy with the arrival of Tencent and its co-investors. They will enable UMG to further develop in the Asian market,” the two companies said in a joint statement.

“Tencent and the consortium members are excited to support UMG’s growth through this investment. Together with Vivendi, Tencent and Tencent Music Entertainment will work to broaden the opportunities for artists and to enrich experiences for music fans, further promoting a thriving music and entertainment industry.”

Tencent has also confirmed that it is working towards a separate agreement that will enable its streaming business, Tencent Music Entertainment, to snap up a minority stake in UMG’s Chinese business.

The acquisition is expected to receive the necessary approvals in the first half of this year, although IMPALA, the Independent Music Companies Association, has already voiced its opposition to the deal.

“Even at a low level of shareholding, we believe the risk of harm for consumers and competitors from such a transaction would be a concern because of the impact in both the digital market and the music sector, with independents being squeezed further and artists also losing out,” IMPALA executive chair Helen Smith told Music Week.

It also 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.