Tencent in Talks to Buy 10% of Universal Music Group

Chinese digital giant Tencent has entered negotiations with French media conglomerate Vivendi to buy a 10% stake in Universal Music Group.

Vivendi announced the talks saying that the negotiations were based on a valuation of UMG of €30 billion ($33.6 billion). Tencent’s potential 10% stake would therefore cost €3 billion ($3.36 billion). The deal would give Tencent a one-year option to purchase another 10% stake on the same terms.

Vivendi said the two companies were also exploring other areas of “strategic commercial cooperation” that would help grow UMG, the world’s biggest music company with market share of more than 30% in 2018, through new digital initiatives and territories.

Vivendi is continuing to seek other buyers interested in a stake in its extremely lucrative music unit, which boasts a glittering roster of superstars such as Katy Perry, Lady Gaga and Billie Eilish, as well as divisions dedicated to publishing, merchandise and other sectors.

Lucian Grainge, CEO and chairman of UMG, hailed the talks with Tencent.

“This is an exciting development for both Vivendi and UMG and affirms once again just how much our strategy and hard work are succeeding,” Grainge wrote. “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.

Tencent had long been rumored to be one of the suitors for a stake in UMG after Vivendi announced a year ago its intention to sell up to 50% of the company. The French media giant ruled out an IPO as an option.

Edited from Vivendi