Vivendi may move forward with the Universal Music Group IPO before the end of 2021.
While the French media conglomerate has been planning an initial public offering for Universal for years, it has been moving up the timeline: It first planned the spinoff for no later than 2023; then, as recently as October, for 2022. On Saturday (Feb. 13), Vivendi announced its “intention to examine the distribution of 60% of the Universal Music Group share capital and its subsequent listing before end 2021.”
The plan, which calls for the company to trade on the Euronext Amsterdam stock exchange, is subject to a Vivendi Extraordinary Shareholders’ Meeting on March 29, 2021.
The idea is to avoid the so-called “conglomerate discount,” under which a company could be valued by the market as less than the sum of its parts — especially by investors looking for more direct exposure to the music sector at a time when streaming is fueling growth and optimism.
“This plan is the result of the joint efforts in recent years by the Vivendi and the Universal Music Group, under the leadership of Sir Lucian Grainge, to further the company’s position as the music industry’s undisputed leader,” Vivendi said in a letter about the move that was shared internally at Universal by Grainge, the company’s chairman and CEO. “Recently the successful opening of UMG’s share capital to an international consortium led by Tencent has confirmed its attractiveness with strategic investors.”
A consortium led by Tencent owns 20% of Universal, and Vivendi now owns the remaining 80%. Based on the last acquisition of shares, by the Tencent consortium in December, Universal could be worth as much as $37 billion.
“I couldn’t be prouder,” Grainge said in his letter to the company. “Not only is this a validation of our strategy, our teams, and our unprecedented record of success, it’s a natural evolution in the storied history of our company that will enable our entrepreneurial and creative culture to continue to soar.”