Tencent to take 10% stake in Vivendi’s music arm, with more likely

French media giant Vivendi has signed its deal with a consortium led by China’s Tencent giving the latter a 10% stake in Vivendi’s most successful operating unit, Universal Music Group (UMG).

The deal, which gives UMG a total enterprise value of €30 billion, also gives the consortium an option to acquire an additional stake of up to 10% on the same terms until January 15 next year, meaning that both transactions could bring €6 billion to Vivendi’s coffers.

A second agreement will shortly see Tencent Music Entertainment acquire a minority stake in UMG’s Chinese subsidiary.

Subject to regulatory approval, the deal is expected to close in the first half of this year.

The French media group said it was “very happy with the arrival of Tencent and its co-investors”, which would “enable UMG to further develop in the Asian market”.

Vivendi had announced in July 2018 that it intend ed to sell up to 50% of UMG  as part of a move to seek strategic partners for the outfit. Vivendi said last August that it was engaged in negotiations with Tencent as its first partner. Tencent dominates Chinese internet access via its WeChat messaging and electronic payment app.

Vivendi for its part already partners with Tencent for distribution of UMG in China. Vivendi is also a shareholder in Tencent Music, which floated on the New York stock market in December 2018.

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