MBW’s Stat Of The Week is a series in which we show why a single data point deserves the attention of the global music industry. Stat Of the Week is supported by Cinq Music Group, a record label focused on technology, distribution and rights management company.
Yesterday, MBW broke the news that Vivendi plans to officially make Universal Music Group “href =” https://www.musicbusinessworldwide.com/companies/universal-music-group/ “> Universal Music Group public in the Netherlands this year year Since our story arrived, we keep hearing the same question: Why Amsterdam?
Obviously, we would love to inform you that Sir Lucian Grainge “href =” https://www.musicbusinessworldwide.com/people/sir-lucian-grainge/ “> Sir Lucian Grainge and the Bollorés chose the dam because of a taste for brightly sunny afternoons in The Grasshopper, but it’s sadly unlikely.
A more viable, albeit accidental, factor may be Vivendi’s own suggestion that the Netherlands is “a country that has been one of UMG’s historic houses”. (This is a reference to PolyGram, which was sold to Seagram for $ 10.6 billion in 1998 and then doubled to UMG. Vivendi later acquired Seagram in a $ 34 billion transaction with all shares in 2000 .)
One reason why Vivendi went Dutch was cited by the Financial Times last week: Euronext Amsterdam recently overtook the London Stock Exchange as Europe’s largest stock trading center, in part due to the “Dutch scoop”[ing] business lost by the UK since Brexit ”.
The FT explained that this trend was driven by the ban on EU-based financial institutions trading in London “because Brussels did not recognize the UK stock exchanges and trading venues as having the same supervisory status as its own”.
Wherever Universal Music Group goes public, perhaps the most impressive opening story of its initial public offering is exactly how it leaves Vivendi’s shareholders.
Vivendi says its management is considering a proposal to separate 60% of Universal’s equity, a decision that will reach March 31. The recently crowned 20% shareholder in UMG, a consortium led by Tencent, offered a “favorable initial response” to this plan.
Under the proposal, this 60% stake in Universal will be distributed to current Vivendi shareholders, presumably giving these shareholders the option to sell their new UMG shares on Amsterdam Euronext as soon as the deal starts.
Exane BNP Paribas estimates that this share distribution would see UMG’s ownership post-IPO (but pre-trade) divided as follows: 20% for Vivendi, 20% for the Tencent consortium, 16% for the Bolloré group (largest shareholder) Vivendi) and 44% for other Vivendi shareholders.
MBW week statistics: Under vivendi’s IPO proposal, a 0.1% shareholder in Vivendi today will soon receive separate shares worth more than $ 20 million in Universal Music Group.
Vivendi says that its current shareholders will receive their share of 60% of UMG’s equity through a “special dividend”. And when you do the math, the emphasis really is on the “special”.
If Vivendi approves the proposal, the owner of a 1% stake in Vivendi appears to additionally receive a 0.6% stake (through this “special dividend”) in the newly formed Universal.
Vivendi, meanwhile, says it is ready for Universal’s initial public offering because UMG’s corporate valuation of € 30 billion (currently worth $ 36 billion) has been consolidated. This was achieved by the Tencent consortium, which acquired a second 10% stake in UMG at a cost of € 3 billion in January.
So what if Universal now floats in Amsterdam with that € 30 billion valuation?
- The owner of a 1% participation in Vivendi today would receive a 0.6% stake in Universal … worth € 180 million (currently worth about $ 218 million)
- The owner of a 0.1% participation in Vivendi today would receive a 0.06% € 18 million stake in Universal … ($ 22 millionn)
- And the owner of a 0.01% participation in Vivendi today would receive a 0.006% € 1.8 million stake in Universal … ($ 2.2 million)
Yes: if all goes well with UMG’s IPO plan, even Vivendi’s shareholders with a fractional stake in the French multimedia house will become multimillionaires.
These numbers can draw the attention of the defenders of the artists, questioning where the part of the money of their herd is. At the end of the day, however, Vivendi investors do not respond to the music business, but to the anguish of the stock market and the relentless rules of corporate ownership.
(As such, these artist advocates may prefer to focus on encouraging Vivendi / Universal to sell UMG’s stake in Spotify “href =” https://www.musicbusinessworldwide.com/companies/spotify/ “> Spotify, which – if it happens today – it would probably generate a payment of more than $ 500 million to the UMG artist community.)
Vivendi’s shareholders will also not get rich just by selling UMG shares; they will stay with their current Vivendi’s shares as well.
Without your majority stake in UMG, you would obviously expect Vivendi to be worth less than today.
This is where math is fun. In a peculiarity of the modern stock market, Vivendi – which is traded on Paris Euronext – currently has a market capitalization of € 30.9 billion.
This is only slightly higher than Tencent’s valuation of Universal Music Group itself (€ 30 billion).
And yet UMG, although Vivendi’s largest company, contributed just under half (45.8%) of the French company’s revenues in the first nine months of 2020.
The rest of Vivendi’s € 11.6 billion revenue during this period was generated by a mix of subsidiaries such as Canal Plus (TV), StudioCanal (Film), Havas (advertising), SeeTickets (box office) and Gameloft (video games).
Vivendi also owns the publisher Editis, which it acquired in a $ 1 billion deal in 2019.
Vivendi will then continue to be a valuable multimedia plant after its crown jewel – Universal Music Group – was released in Amsterdam.
However, even with UMG’s majority stake in a plane to Schiphol, this will leave Vivendi investors with a bright, golden goodbye.
The Cinq Music Group repertoire has won Grammy awards, dozens of gold and platinum RIAA certifications and various positions in the. 1 on the charts at a variety of Billboard charts. His repertoire includes heavyweights like Bad Bunny, Janet Jackson, Daddy Yankee, TI, Sean Kingston, Anuel and hundreds of others.World Music Business