Chinese tech group Tencent is set to purchase a 10% stake in Universal Music Group from mass media conglomerate Vivendi.
Vivendi has formed a deal with Tencent to sell a 10% stake in Universal Music Group (UMG), the world’s biggest music company. Universal currently streams content in China via a deal with Tencent in 2017.
Among the artists on the Universal label are Lady Gaga, Taylor Swift, Drake and Kendrick Lamar. Vivendi, the music group’s parent company, released a statement saying it “hopes to improve the promotion of UMG’s artists” through Tencent.
The conglomerate added that it also aims to “identify and promote new talents in new markets”.
Vivendi stated that the deal will give UMG a preliminary equity valuation of €30 billion and will grant Tencent an option to purchase an additional 10% stake in the music group within a year.
UMG chairman Sir Lucian Grainge, wrote to the staff, calling the proposed deal “an exciting development” and assuring that the group would remain “part of the Vivendi family”.
Grainge said: “I can assure you that Vivendi’s supervisory and management boards, as well as the Bolloré family, continue to be steadfast supporters of our strategy, our work and our teams.”
“And it goes without saying that our commitment to recording artists and songwriters will continue unchanged,” he added.
More than a year ago, Vivendi recommended the sale of up to 50% stake in UMG which it hoped to complete at the start of 2020. Investment banks have valuated UMG to be worth anything between €17 billion and €44 billion.
Vivendi is looking to take advantage of popularity of subscription and ad-based music streaming services, which has helped boost the music group’s profits over the last four years.
In April 2017, UMG signed a long term deal with music streaming service Spotify, which allowed Universal artists to offer new albums on Spotify’s paid-for premium service before appearing on its free version.