Vivendi Plans IPO For $33 Billion Hit Machine Universal Music

(Bloomberg) -- Vivendi SA is planning an initial public offering for part of Universal Music Group by early 2023, in a strategic reversal that would give ordinary investors a rare opportunity to own part of a major music business.

Universal Music is the French media group’s big profit driver and it’s raking in money from the surging popularity of music streaming. Subscription and streaming sales jumped 22% last year as it churned out hits from Billie Eilish, Post Malone, Taylor Swift and Ariana Grande.

An entry onto the stock market could give the world’s biggest music company more financial clout to compete with its two giant rivals, Warner Music Group Corp. and Sony Music Entertainment. The announcement comes a week after Warner Music, home to Cardi B, Ed Sheeran and Bruno Mars, filed for its own IPO.

Vivendi is already selling as much as 20% of Universal Music to Chinese tech giant Tencent Holdings Ltd. in a deal that values the business at 30 billion euros ($33 billion) and gives it easier access to Asian music fans. Tencent also plans to take a minority stake in Universal Music’s Chinese subsidiary.

Vivendi announced the IPO plan alongside full-year results, without saying if the listing will involve the music group itself or one of its subsidiaries -- or how much might be sold.

“Terms and conditions of the IPO will be defined in due course,” Chief Executive Officer Arnaud de Puyfontaine told analysts on a call.

Vivendi shares were up 1.3% in Paris as of 9:03 a.m.

About-Turn

Private equity investors have been paying high prices for closely held record labels as the industry bounces back from a crisis caused by online piracy and the collapse of CD sales.

Vivendi floated the possibility of a music IPO in 2017 before ruling it out the following year, saying it was too complex. It opted instead to find strategic partners for as much as half of the business as a way to boost its value.

The parent company’s advertising and pay-TV businesses are under growing competitive pressure and Universal Music needs to keep outperforming. While global pop star Taylor Swift has deepened her involvement with Universal Music, its sales growth slowed in the fourth quarter due partly to a lack of major releases.

Vivendi’s revenue rose 14% overall last year to 15.9 billion euros ($17.3 billion). That still beat the 15.68 billion euros analysts were expecting.

The company said it could use proceeds from the sale of Universal Music stakes for “substantial share buyback operations and acquisitions,” in comments that could reassure investors hoping for a lift from the Tencent deal.

To contact the reporter on this story: Angelina Rascouet in Paris at arascouet1@bloomberg.net

To contact the editors responsible for this story: Thomas Pfeiffer at tpfeiffer3@bloomberg.net, Rebecca Penty

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