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 technology-driven record label, distribution and rights management company.
Yesterday, MBW announced the news that Vivendi officially plans to release Universal Music Group “href =” https://www.musicbusinessworldwide.com/companies/universal-music-group/ “> Universal Music Group in the Netherlands later this year Since our story ended up, we still hear the same question: why Amsterdam?
Clearly we would like to tell 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 a fondness to blow away the sunny afternoons in The Grasshopper merrily, but that is sadly unlikely.
A more feasible, albeit coincidental, factor could be Vivendi’s own suggestion that Holland ” was a country that was one of UMG’s historic homes ”. (This is a reference to PolyGram, which was sold to Seagram for $ 10.6 billion in 1998 and then folded into UMG. Vivendi subsequently acquired Seagram in a $ 34 billion deal in 2000.)
One of the reasons why Vivendi is Dutch was nailed down by the Financial Times last week: Euronext from Amsterdam recently won the London Stock Exchange as the largest center in Europe, partly due to ‘the Dutch creator[ing] matters lost by the UK since Brexit ”.
The FT explained that this trend was fueled by a ban on EU-based financial institutions trading in London, “because Brussels does not recognize UK exchanges and trading venues as having the same supervisory status as its own”.
Everywhere in the world that Universal Music Group makes public, the most striking original story that emerged from the IPO is just how collectively it leaves Vivendi’s shareholders.
Vivendi says its management is now evaluating a proposal to wipe out 60% of Universal’s equity, a decision it will take by March 31. UMG’s recently awarded 20% shareholder, a consortium led by Tencent, offered an “initial favorable response” to this plan.
Under the proposal, this 60% stake in Universal would be distributed to existing Vivendi shareholders, presumably giving these shareholders the option to sell their new UMG equity on the Amsterdam Euronext once trading begins.
Exane BNP Paribas estimates that this share spread would divide UMG ownership (but pre-trading): 20% to Vivendi, 20% to the Tencent consortium, 16% to the Bolloré Group (Vivendi’s largest shareholder) and 44% to other Vivendi shareholders.
MBW’s Stat of the Week: Under vivendi’s IPO proposal, a 0.1% stake in Vivendi will soon receive separate shares worth more than $ 20 million in Universal Music Group.
Vivendi says its current shareholders will receive their share in the 60% spread of UMG equity via a ‘special dividend’. And when you do math, the emphasis really falls on the ‘special’.
Should Vivendi approve the proposal, it appears that the owner of a 1% stake in Vivendi will also receive a 0.6% stake (via that ‘special dividend’) in the newly expanded Universal.
Vivendi meanwhile says it is ready for Universal’s IPO because UMG’s business valuation of € 30 billion (currently worth about $ 36 billion) has been cemented. This was achieved by the Tencent consortium, which in January cost a second tranche of 10% UMG for € 3 billion.
So, if Universal is now floating in Amsterdam with this proposed valuation of € 30 billion?
- The owner of a 1% interest in Vivendi today a 0.6% interest in Universal … worth € 180 million (currently worth about $) $ 218 million).
- The owner of a 0.1% interest in Vivendi today a 0.06% interest in Universal … worth € 18 million ($ 22 milliona)
- And the owner of a 0.01% interest in Vivendi today a 0.006% interest in Universal … worth € 1.8 million ($ 2.2 million)
Yes: if all goes well with the UMG IPO plan, even Vivendi shareholders with a broad share in the French multimedia house will become multimillionaires.
Such numbers may attract the attention of artists’ advocates and question where their herd’s share in the money is. At the end of the day, however, Vivendi’s investors do not respond to the music industry, but to the stocks of the stock market and to the harsh rules of corporate ownership.
(As such, the artists would like to advocate rather encouraging Vivendi / Universal to sell UMG’s stake in Spotify “href =” https://www.musicbusinessworldwide.com/companies/spotify/ “> Spotify, which – if that would happen today – would probably result in a payment of more than $ 500 million to UMG’s artist community.)
Vivendi shareholders will also not only get rich from their UMG share sales; they will be left with their current shares in Vivendi as well.
Without the majority ownership of UMG, you would naturally expect Vivendi to be worth less than it is today.
Mathematics is fun here. In the peculiarity of the modern stock market, Vivendi, which trades on the Paris Euronext, has a market capitalization of € 30.9 billion.
That’s just a little bit higher than the Universal Music Group’s appreciation (€ 30 billion) of Tencent.
In the first nine months of 2020, UMG, although Vivendi’s largest company, contributed just under half (45.8%) of the French company’s revenue.
The rest of Vivendi’s revenue of € 11.6 billion during this period was generated by a mix of subsidiaries such as Canal Plus (TV), StudioCanal (Film), Havas (advertising), SeeTickets (tickets) and Gameloft (video games).
Vivendi also owns the publisher Editis, which it acquired in a $ 1 billion deal in 2019.
Vivendi will then continue as a valuable multimedia power station after the release of its crown jewel – Universal Music Group – in Amsterdam.
Although the majority ownership of UMG jumps on a plane to Schiphol, it will leave Vivendi’s investors with a dazzling golden farewell.
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