Vivendi plans to list Universal Music Group on Amsterdam's Euronext exchange by the end of 2021

By Emmanuel Legrand

French entertainment group Vivendi  has unveiled plans to spin off by the end of 2021 its music division, Universal Music Group (UMG), on the Euronext NV exchange in Amsterdam.

  The company has set a minimum target of €30 billion for UMG’s enterprise value, which is consistent with the recent purchase of 10% of UMG's shares by a consortium led by China's Tencentfor €3bn, in addition to the 10% it already owned.

  Vivendi said in a statement that its leading institutional shareholders "have been pressing for a number of years for a split or the distribution of Universal Music Group (UMG) to reduce Vivendi’s conglomerate discount," and that following an assessment on how to "obtain a fair value for UMG to better serve the interests of its shareholders" decided that the listing of UMG will take place by the end of this year.

Bolloré will control 36% of UMG

  The Management Board of Vivendi is considering a distribution of 60% of UMG’s share capital to Vivendi shareholders, in the form of a "special dividend." Vivendi owns 80% of UMG. Vivendi's Chairman of the Board Vincent Bolloré, owns 27% of Vivendi through his family holding.

  Reuters calculated that UMG's listing would net Bolloré about 16% of Universal’s shares directly, which combined with the 20% Vivendi will still own, should give Bolloré control of about 36% of UMG's capital.

  The listing of the shares of UMG would be applied for on the regulated market of Euronext NV in Amsterdam. Vivendi explained that the choice of Amsterdam was related to the fact that UMG's holding company is currently being incorporated in the Netherlands, a country which has been one of UMG’s "historical homes."

An undisputed market leader

  The latter point was a reference to PolyGram, the Philips-owned music company that was acquired by Seagram in 1998 and merged into its music division Universal Music Group. Vivendi then merged its assets with Seagram's and eventually became the sole owner of UMG.

  Yannick Bolloré (pictured, below), Chairman of Vivendi’s supervisory board, and Vivendi CEO Arnaud de Puyfontaine, said in a memo to employees that the plan "is the result of the joint efforts in recent years by the Vivendi and the Universal Music Group, under the leadership of Sir Lucian Grainge, to further the company’s position as the music industry’s undisputed leader.”

  They added: “UMG has strengthened its worldwide leadership by focusing on its creative DNA and uniqueness: talent, both new and established, both local and global. At the same time, UMG has succeeded in leading the massive transformation in consumer adoption of streaming and subscription.” 

A validation of Vivendi's strategy

  UMG Chairman and CEO Lucian Grainge commented on the project to establish UMG as a stand-alone company in a memo to staff, seen by Music Week: "I couldn’t be prouder: not only is this a validation of our strategy, our teams, and our unprecedented record of success, it’s a natural evolution in the storied history of our company that will enable our entrepreneurial and creative culture to continue to soar. We’ll continue to drive towards our strategic goals – full steam ahead. We’ll remain committed to our artists and songwriters. And we’ll continue to innovate and help lead the music community towards an incredible next chapter."

  Vivendi said it would call for an Extraordinary Shareholders’ Meeting for March 29, 2021 to modify the company’s by-laws and make the distribution of shares possible. "Subject to a positive shareholder vote, Vivendi will continue to work on this project, including a Shareholders’ Meeting to approve the distribution and subsequent completion of the transaction before end 2021," said the company.