Vivendi Mulls Spinning Off Money Maker UMG by End of Year

(Bloomberg) --

Vivendi may spin off its profitable Universal Music Group by the end of the year in Amsterdam, a move some of the company’s investors have pushed for years in an effort to reduce the so-called conglomerate discount.

The company made the announcement on the timing after it completed the sale of a 10% stake in Universal Music to a Tencent Holdings Ltd.-led consortium that valued the world’s biggest music company at 30 billion euros ($36.4 billion). The Tencent-led group now owns 20% of the unit.

The transaction, “as well as interests expressed by other investors at potentially higher prices, have now enabled the Management Board to consider a distribution of 60% of UMG’s share capital to Vivendi shareholders,” the company said in an e-mailed statement.

Vivendi has been working toward spinning off its music division for at least a year, first announcing a plan for an initial public offering in February 2020. Universal Music has been raking in money from the surging popularity of music streaming that has dragged the industry out of a decade-long slump. That success has limited the blow to the French media group from a drop in advertising and publishing revenue.

A stock market presence could give UMG more financial clout to compete with rivals Warner Music Group Corp. and Sony Music Entertainment. It may also narrow the discount some investors believe is applied to Vivendi shares because of its holding structure.

While the original target was for an early 2023 listing, Vivendi has accelerated its plans and now aims to complete the process this year. Shareholders will be asked to approve the plan at a meeting on March 29, Vivendi said, adding that the Tencent-led group favored going public.

Vivendi also plans to propose a dividend of 60 euro cents for 2020.

The Paris-based media group has fallen 1.1% this year, compared with a 3.8% gain in the Eurostoxx-600 benchmark stock index.

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