Shares in Universal Music Group (UMG) will not be listed for public sale by parent company Vivendi. Instead, Vivendi will look for strategic partners to buy up to 50% of UMG’s share capital.
The announcement was made by Vivendi during its half year earnings call. There had been speculation that Vivendi would list UMG shares in an IPO (initial public offering).
“The decision has been made to offer up to 50% of UMG’s capital to one of several strategic partners in order to extract the most important value,” said Vivendi CEO Arnaud de Puyfontaine. “The transaction … could be completed within the next 18 months. Vivendi will soon be engaging banks to help identify strategic partners.”
He added: “We will only choose investors who are compatible with UMG’s current strategy. The proceeds could be used for significant share repurchase, reduction of capital and bolt-on acquisitions.”
Vivendi should be able to set a premium price thanks to UMG’s recent financial success. Company revenues were €2.63bn for the first half of 2018, with streaming income rising significantly – streaming now accounts for more than 50% of its recorded music revenues.
UMG has several classical music subsidiaries, including Deutsche Grammophon, Decca Records, Decca Classics and Mercury Classics.