What is the biggest music company
Whether rock classics like that Rolling Stones or Bob Dylan, current pop stars like Lady Gaga and Billie Eilish or rap greats like Kanye West and Eminem - Vivendi always makes a profit.
Now the Paris-based media group wants to bring its subsidiary Universal, the world's largest music label, to the stock exchange. Immediately after this announcement, the price of Vivendi shares skyrocketed by more than 20 percent on Monday. Obviously, many would like to have a stake in Universal if Vivendi soon issues the shares to its shareholders.
The lucrative financial business around Universal bears the signature of Vivendi's main shareholder Vincent Bolloré. By skillfully buying and selling companies, he has grown from inheriting a cigarette paper factory in Brittany to becoming a multi-billionaire. Now he is using the boom in music streaming to split off Universal, rebuild Vivendi - and further increase his fortune.
A group with legendary labels
Universal Music Group (UMG), based in Santa Monica, California, is Vivendi's most important holding. It includes famous music publishers such as EMI, Deutsche Grammophon and Abbey Road Studios. Two-thirds of Vivendi's profits come from Universal. According to the new plan, 60 percent of UMG will be distributed to Vivendi shareholders in the form of a special dividend before the end of this year and the company will be listed on the stock exchange in Amsterdam. The required approval of the Vivendi general meeting in March is a matter of form.
For several years now, Vincent Bolloré and his son Yannick, who has taken over from him as Vivendi supervisory board chairman, have been looking for the right time to split off from Universal. When the competitor Warner Music successfully went public in June 2020, it was clear that the market environment was right. The Bollorés and Vivendi CEOs Arnaud de Puyfontaine also wanted to make sure that Universal was valued at at least 30 billion euros. This condition has recently been met: the Chinese online gaming and internet company Tencent bought 20 percent of the Universal shares from Vivendi before the IPO and paid six billion euros for it. Extrapolated to the total of the shares, the desired valuation of 30 billion euros is fulfilled. And the enthusiastic reaction of investors on Monday suggests that Universal will be worth even more after the IPO.
Bolloré benefits - and retains power
The Bolloré family benefits twice: in the future they will have a direct stake in UMG and will continue to hold an indirect stake because Vivendi will keep 20 percent of Universal shares. In this way, the Bolloré clan retains power over the music label in the course of the highly wealth-creating operation. Both blocks of shares taken together give it a blocking minority.
Patriarch Vincent Bolloré and the other Vivendi shareholders take advantage of the fact that good money can be made with music again. That was different for a long time: The takeover of Universal by Vivendi twenty years ago only appeared to be a flop. CDs no longer sold, and pirated sites like Napster sabotaged the business further. In the meantime, however, legal streaming services such as Spotify and Apple Music dominate digital distribution - and Universal is collecting license money from them. In the Corona crisis, the label continues to increase its revenues, although the business with music festivals is no longer there. The wide range of UMGs offered by the Beatles extends to the new top star The Weeknd, gives an additional boost.
Once Universal is listed on the stock exchange, Vivendi will remain a hodgepodge of investments, for example in the video game manufacturer Gameloft, the French pay channel Canal Plus, the advertising agency Havas, and book publishers. If the company hunter Bolloré then follows his tried and tested prey scheme, he will reinvest the UMG sales proceeds in weakened companies.
His recent investments show that he believes in the classic media business that others have already written off. Vivendi has just bought the magazine publisher Prisma from its German rival Bertelsmann. According to industry rumors, Vivendi could also acquire the French television broadcaster M6 from Bertelsmann. Bolloré is also said to be interested in catalogs of Hollywood films. All that money has to go somewhere.
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