D.he French media and entertainment group Vivendi announced some time ago that it wanted to part with its most important subsidiary, the Universal Music Group (UMG), the world’s largest music group. 20 percent of UMG has already gone to an international consortium led by the Chinese company Tencent.
Vivendi shareholders are to receive 60 percent via a spin-off from the stock exchange. On Friday Vivendi announced who should become another anchor shareholder: It is Pershing Square Tontine Holdings, a shell called Spac under the direction of the American billionaire Bill Ackman.
Vivendi does not see the future in music
If the deal goes through, which most observers expect, it will be the largest takeover that Spac has ever made. Ackman is negotiating with Vivendi about the purchase of 10 percent of the UMG music company, which is valued at 35 billion euros. Since the end of last year, UMG has increased in value by almost 17 percent. After the announcement in December 2020, the Tencent consortium had bought its shares on a valuation basis of 30 billion euros.
As Vivendi announced, Pershing Square could also buy Vivendi shares or further UMG shares as soon as the music company is listed on the Amsterdam Stock Exchange in the third quarter of 2021 as planned. A complete merger of UMG and Pershing is not planned.
Vivendi sees his future in the creation of media content, but not in music, but in publishing (with the Editis publishing house), television (Canal Plus), computer games (Gameloft) and his advertising agency Havas. At the end of May Vivendi completed the purchase of the Prisma Media magazine group from Gruner + Jahr, which includes magazines such as the French editions of Personal-Financial.com, Geo and Gala. The talk was of a purchase price between 100 and 150 million euros.
UMG with a turnover of 7.4 billion euros
The Prisma Media Group, which was built up primarily by the German manager Axel Ganz, now has around 1200 employees and around twenty magazine titles. “I don’t believe in the inexorable erosion of the magazine press. The doom and gloom is over. We want to invest, ”Vivendi boss Arnaud de Puyfontaine recently told Prisma Media employees.
However, some journalists are also concerned because the Vivendi major shareholder Vincent Bolloré, whose son Yannick chairs the board of directors, caught the attention of the Canal Plus television station for interfering with the journalistic content.
UMG generated sales of 7.4 billion euros in the past year (almost 4 percent above the previous year) and thus almost half of Vivendi’s group revenues. In terms of profit before taxes and interest, UMG even stands for more than 80 percent of the group-wide value. But investors have long valued Vivendi at a discount because they see the structure as a conglomerate of loose parts.