[NEWS] Vivendi turns to Tencent to gain Universal foothold in China – Loganspace AI

PARIS/BEIJING (Reuters) – Vivendi (VIV.PA) is in talks to sell as much as 20% of Universal Tune Neighborhood (UMG) to Tencent (0700.HK), valuing its prized asset at around 30 billion euros ($34 billion), in an are attempting to ruin into China’s rising nonetheless tightly-managed tune market.

While at a preliminary stage, the discussions highlight Tencent’s aim as gatekeeper to China and the want of Universal, whose revenues are surging on memoir of on-line streaming, to accumulate higher beyond its mature markets.

French media community Vivendi, managed by billionaire Vincent Bollore, talked about that Tencent would first make a choice 10% of Universal and have an approach to make a choice an additional 10%.

Universal is the area’s finest tune tag ahead of Sony Tune Entertainment and Warner Tune, and is dwelling to artists such as Lady Gaga, Taylor Swift, Drake and Kendrick Lamar.

Each and every groups are also “enraged about areas of strategic commercial cooperation”, Vivendi talked about, raising questions amongst some analysts over the scope of the talks.

“It is far unclear if the stake sale depends on the parallel commercial take care of TME (Tencent Tune Entertainment) and what financial transfers this deal entails,” talked about Jerry Dellis, an analyst at Jefferies.

Dellis also talked about in a present to customers that U.S. political opposition to Chinese language investment in what would be opinion to be a strategic asset would possibly maybe well well maybe hinder a deal.

CHINESE PAYWALL

A take care of Tencent would boost Universal’s presence and fit effectively with the Chinese language firm’s subsidiary TME (TME.N), which tends to outbid its local rivals in acquiring tune replica rights in mainland China.

After a cash-burning rivals to snap up tune rights, China’s protest regulator final year demanded tune streaming web sites half ninety nine% of their rights reserve with every varied.

Unlike Western avid gamers such as Sweden’s Spotify, Tencent Tune generates easiest a piece of income from tune subscription purposes, and as a replacement depends heavily on services and products smartly-liked in China such as on-line karaoke and reside streaming.

Universal and Tencent both withhold shares in Spotify (SPOT.Okay), the area’s finest tune streaming platform which has a market capitalization of about $27 billion, whereas the Swedish firm is a stakeholder in Tencent Tune.

Tencent talked about at the time of its final earnings that it used to be including more tune slack a paywall, including smartly-liked Taiwanese singer Jay Chou, to elevate income. Nonetheless it surely talked about it will purchase time sooner than Chinese language customers adapt to this fairly novel methodology.

STAKE SALE

Vivendi shares surged 7% as analysts welcomed progress on the sale of a stake in Universal and the implied valuation.

“The valuation looks wonderful-making an are attempting, and the progress made on the UMG deal would possibly maybe well well be obvious,” talked about Gregory Moore, fund supervisor at Keren Finance, which owns Vivendi shares.

Meanwhile Tencent, whose shares closed 1% decrease in Hong Kong, after Vivendi’s announcement, declined to say.

Vivendi’s Chief Govt Arnaud de Puyfontaine talked about final month that proceeds of the sale of as much as 50% of Universal would possibly maybe well well maybe be feeble for fling-on acquisitions and half buybacks.

The community first talked about it would possibly maybe well well maybe sell share of Universal a year ago nonetheless had made diminutive progress except announcing final month that it had selected investment banks to start a formal sale, which wants to be finalised by the start of 2020.

Investment banks have estimated the enterprise is rate anything else between 17 billion to 44 billion euros.

Vivendi also talked about that it used to be continuing the course of to sell further minority stakes in Universal to varied companions.

Monetary companies are being sounded on high of doable industrial companions, a supply shut the matter talked about.