Universal Music Group valuation hits $50bn – as Vivendi seeks ‘half dozen’ investment bank partners

Sir Lucian Grainge, Chairman and CEO, Universal Music Group

Universal Music Group‘s valuation just keeps on mushrooming.

The company’s worth was being pegged at €29bn ($33bn) by Deutsche Bank in early January, before Morgan Stanley upped the stakes. In mid-January, the latter bank suggested that Universal was worth $29bn at a “base valuation” – but that in a “bull case”, it could be worth anywhere up to $42bn.

Now, that high-water mark has been hoisted skyward yet again. This time, it’s JPMorgan, which has just stuck a gigantic €44bn ($50bn) ‘fair value’ price-tag on UMG.

In a new report from JPMorgan Cazenove, media analyst Daniel Kerven describes UMG as “a unique asset” which owns and controls “undermonetized, must-have, global content that is strategic to the tech giants and can’t be replicated”.

The $50bn valuation is worth no less than 48.8 times Universal’s latest annual EBITA (earnings before interest, taxes, and amortization).

As revealed last week, UMG recorded a €902m ($1.07bn) EBITA in 2018, with total yearly revenues – across records, publishing, merch and more – weighing in at €6.023bn ($7.15bn).

Vivendi is busy working on the prospective sale of up to 50% of UMG to a buyer (or buyers). Due diligence on investment bank partners has begun, with a floor price to be set soon.

“[Universal owns] undermonetized, must-have, global content that is strategic to the tech giants and can’t be replicated.”

Daniel Kerven, JPMorgan

According to a Reuters report today (February 18), Vivendi is looking to choose “a half-dozen firms” to handle the matchmaking of UMG with a buyer.

JP Morgan, with its $50bn valuation, would ordinarily be an obvious standout amongst the candidates, but things are getting complicated; JPM played a role in a  fallout between Vivendi and an activist investor, Elliott Advisors, over Telecom Italia last year.

In April 2018, JPM reportedly helped Elliott acquire a 8.8% stake in Telecom Italia, which supposedly left Vivendi “fuming”. Universal’s French owner is now, says Reuters,  in a “battle with Elliott over strategy, management and the board of the Italian group, in which it owns 24%”.

Sir Lucian Grainge, Chairman and CEO of UMG (pictured), may be hoping that all is temporarily forgiven, if it means a $50bn valuation is touted around the global M&A marketplace.

Potential buyers of Universal Music Group mooted by some quarters have included Apple, Liberty Media, Tencent, Alibaba, Verizon and Google.Music Business Worldwide

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