Thursday, July 29, 2021
HomeVivendi Spins Off from Universal Music Group Following $40B Investment

Vivendi Spins Off from Universal Music Group Following $40B Investment

The spin-off vote got here after Vivendi bought 10% of UMG to Pershing Sq. Tontine Holdings Ltd (NYSE: PSTH).

Shareholders of Vivendi SE (EPA: VIV), a French media conglomerate, permitted the spin-off of the enduring Common Music Group (UMG). On the annual common shareholders’ assembly held Tuesday, 99% of shareholders proudly owning 69% of Vivendi shares backed the proposal.

With this, the world’s largest music label will turn out to be listed on the Euronext Amsterdam by September 21. A consensus was additionally reached to distribute 60% of UMG’s share capital amongst shareholders following the general public itemizing.

The spin-off vote got here after Vivendi bought 10% of UMG to Pershing Sq. Tontine Holdings Ltd (NYSE: PSTH). The latter is a SPAC owned by tycoon Invoice Ackman. Introduced Sunday, the $4 billion deal raised the corporate’s valuation to €35 billion ($41.55 billion). Already, the Chinese language large tech agency Tencent Holdings has a 20% fairness stake in UMG, after it doubled it final yr, valuing the enterprise at about €30 billion.

UMG is residence to star artists corresponding to Taylor Swift, Girl Gaga, and the Beatles. It holds roughly 40% market share of the home recorded music enterprise, which is about 30% globally. The enterprise additionally generates about 75% of Vivendi’s proceeds.

Larger Image on Vivendi and Common Music Group Spin-Off

Activist hedge funds corresponding to Bluebell and Artisan Companions Asset (NYSE: APAM) have criticized Vivendi’s spin-out. The 2 declare that such a choice stands to learn larger buyers, on the expense of smaller buyers. Traders corresponding to Vincent Bollore, a French billionaire businessman holding 30% voting rights at UMG, will profit most.

About 75% of Vivendi’s shareholders voted in favor of the corporate’s plan to purchase again and cancel as much as 50% of its inventory.

Controversies have additionally risen on Vivendi’s capital allocation after the spin-out. There’s concern amongst some buyers on the tax implications for smaller shareholders following the spin-off. Furthermore, many are querying Vivendi’s choice to promote small parts of its enterprise quite than spinning off a bigger share.

Nonetheless, this incarnation will make UMG the brand new rival to Warner Music Group (NASDAQ: WMG), which enlisted on the NASDAQ in June. Since their debut, shares have surged 15% previously yr, in accordance with MarketWatch. The corporate can be the third-largest recording label, after UMG itself and Sony Music Leisure.

The music trade’s resurgent in 2016 was attributed to the expansion of streaming companies corresponding to Apple Music and Spotify. These outweighed CDs and digital downloads, whose gross sales had skilled an elongated 15-year decline attributable to rampant piracy. At present, streaming instructions 80% of US recorded music income which is over 60% worldwide.

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Steve Muchoki

A monetary analyst who sees optimistic revenue in each instructions of the market (bulls & bears). Bitcoin is my crypto protected haven, free from authorities conspiracies.
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