French media giant Vivendi is moving forward with plans for a partial sale of Taylor Swift and Ariana Grande’s label Universal Music Group, it announced Tuesday.
Vincent Bollore’s conglomerate said it has entered talks with China’s Tencent Holdings for a 10 percent stake in the music company based on a $33.6 billion valuation. Any deal would also give the Chinese tech giant Tencent the option to buy a further 10 percent stake in the company within a year.
Vivendi, which announced in July of 2018 that it was exploring a partial sale of up to 50 percent in the music giant, said it will continue to seek other partners for additional minority stakes. The unit is also home to Lady Gaga, Drake and Post Malone and is looking to further its growth as consumers move to streaming services.
“Vivendi is keen to explore enhanced cooperation which could help UMG capture growth opportunities offered by the digitalization and the opening of new markets,” Vivendi said. “Together with Tencent, Vivendi hopes to improve the promotion of UMG’s artists, with whom UMG has created the greatest catalogue of recordings and songs ever, as well as identify and promote new talents in new markets.”
UMG CEO Sir Lucian Grainge praised the move in a note to employees. “This is an exciting development for both Vivendi and UMG and affirms once again just how much our strategy and hard work are succeeding. As Vivendi discussed last week with its investors, we continue to deliver remarkable, record-setting results. Our success is driven by placing our recording artists and songwriters at the center of everything we do and providing them with the industry’s best creative and commercial resources on a global basis,” he wrote.
He added: “As we move forward, we will continue to embrace change and disrupt the traditional business, as we build a bright future for ourselves, our artists and our investors.”
UMG’s revenue was up a huge 24 percent in the first half of 2019 to $3.7 billion, including revenue from music, publishing and merchandise sales. Recorded music was up 22 percent itself on the strength of streaming growth.
Vivendi shares were up 6 percent early Tuesday after the news.