If you were thinking that it’s been a long time since August – when Tencent Holdings Ltd. publicly confirmed an intention to buy 10% to 20% of Universal Music Group – you’re not alone.
According to anonymous sources speaking to Reuters, Tencent has actually “struggled to find the money to complete the transaction” for the past six months.
This explains why the Chinese company – the majority owner of Tencent Music Entertainment – was reported last month to be bringing in outside investors to help fund the deal, with possible backers including Hillhouse Capital and Singapore’s sovereign wealth fund, GIC.
Now, according to Reuters, Tencent has turned to GIC and “other sovereign funds” to help rescue the deal after “major buyout funds quit the negotiating table”.
Sources claim that private equity funds KKR and Hellman & Friedman deserted negotiations last month, putting a question mark over whether a deal could even get done – but things now appear much rosier.
The quite big news, then: Tencent’s bid for 10-20% of Universal nearly fell through, but now it probably looks back on track.
The really big news? According to Reuters, the latest turn of events is that Tencent, backed by a consortium of state investors including GIC, would buy a 20% to 30% stake in UMG.
Reuters adds that talks between Tencent and sovereign wealth investors “have gained traction” in recent weeks.
As a result, a deal could now be worked out by the end of December, say sources, but this could slip into January.
Considering UMG’s initial valuation when negotiations kicked off back in November was €30bn ($34bn), a 30% stake would be worth over $10bn.
Vivendi confirmed in August that Tencent had a one-year call option to acquire an additional 10% of Universal (in addition to its then-maximum 20% ownership) at the same price and terms.Music Business Worldwide