KKR, China's Tencent eyeing bids for Universal Music - sources

Credit: Reuters Studio
Published 3 weeks ago - Duration: 02:03s

KKR, China's Tencent eyeing bids for Universal Music - sources

A U.S. buyout fund KKR and China's Tencent Music Entertainment Group are exploring rival bids for up to half of Vivendi's iconic Universal Music division, a deal potentially worth up to 20 billion euros ($23 billion), sources told Reuters.

Francis Maguire reports.

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KKR, China's Tencent eyeing bids for Universal Music - sources

Up to half of Vivendi's iconic Universal Music division - home to global stars like Taylor Swift and Ariana Grande - is up for sale... According to sources - at a possible valuation of $23 billion.

A Reuters exclusive says U.S. buyout fund KKR and China's Tencent Music Group are possible buyers.

And that Vivendi's Vincent Bollore is choosing banks to oversee a partial sale.

(SOUNDBITE) (English) REUTERS BREAKINGVIEWS COLUMNIST, LIAM PROUD, SAYING: "Universal is one of the most popular labels.

It has about a one third share of the global market.

So, if you want to own, you probably want to own Universal." The music industry has proven lucrative for investors recently, as it recovers from a 15-year long downturn.

Music revenues rose 8.1 percent in 2017 to $17.3 billion, according to an IFPI industry estimate.

With streaming services like Spotify behind most of the growth - 176 million paid subscribers drove sales up 41 percent.

(SOUNDBITE) (English) REUTERS BREAKINGVIEWS COLUMNIST, LIAM PROUD, SAYING: "You saw revenues had collapsed as people weren't buying CDs or vinyls anymore.

We've seen a reverse of that trend, with companies like Spotify, Apple Music making a lot of money for the labels by allowing people to subscribe with monthly payments for online streaming." Buyers might find it hard to negotiate a joint venture deal with Bollore - sources claim, As they wouldn't have a majority stake in Universal Music or have a meaningful say on its strategy for the future.

The deal also appears to end Vivendi's interest in an IPO for UGM, An option the firm was exploring in 2017.

(SOUNDBITE) (English) REUTERS BREAKINGVIEWS COLUMNIST, LIAM PROUD, SAYING: "Vivendi arguably should consider an IPO and it's a little mysterious why they don't do so.

It's possible that they're looking at the current market conditions and saying stock markets are a bit too volatile, we're not sure how much cash we'd get for this.

There's a lot of cash in private markets, private equity, big groups like Tencent - maybe that's a surefire way of getting the cash." Vivendi, KKR and Tencent declined to comment on the reports.

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