Official: Universal Music Group to sell 10% stake, worth over $3bn, to Tencent-led Consortium

Sir Lucian Grainge, Chairman & CEO of Universal Music Group, speaks at Sir Lucian Grainge's 2019 Artist Showcase Presented by Citi on February 9, 2019 in Los Angeles. (Photo by John Salangsang/Invision for Universal Music Group/AP Images)

They got it done before the new year.

Tencent Holdings Ltd has today (December 31) informed its shareholders that a Tencent-led Consortium has signed a share purchase agreement with Vivendi to acquire 10% of Universal Music Group.

The deal has been struck with UMG holding an enterprise value of €30bn ($33.6bn), meaning that over $3bn will land in Vivendi’s coffers as a result of the acquisition.

The Tencent-led Consortium is joined by Tencent Music Entertainment Group and undisclosed ‘global financial investors’.

Earlier this month, reports suggested that Tencent was turning to sovereign wealth funds in order to raise the capital needed to complete the UMG deal.

The Tencent group can increase its stake in UMG to as much as 20% at the same valuation until January 15, 2021, the parties have confirmed.

Prior to the closing of the Consortium-UMG transaction, Tencent and UMG say that they also intend to enter into a second agreement that grants Tencent Music Entertainment (TME) an option to acquire a minority equity stake in UMG’s Greater China business.

This transaction will be subject to the receipt of regulatory approvals and other customary closing conditions, and is expected to close by the end of the first half of 2020, says Tencent.

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

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

[Pictured: Sir Lucian Grainge, UMG’s Chairman and CEO, at the firm’s Grammy Showcase in Los Angeles earlier this year]Music Business Worldwide

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