EA special kind of IPO enriches the offers for investors from this Tuesday on. The French entertainment and media group Vivendi is launching its subsidiary Universal Music. More than ever, the stock exchange can now say that “there is music in there”, because before Universal Music was only available as part of the broad-based Vivendi group. In the future, however, the world’s largest music company will be an independent asset for investors.
Universal Music is number one among the three leading music companies called majors, which also include Sony Music and Warner Music. According to the Music & Copyright website, Universal’s share of the global music recording market last year was 32.1 percent. Number two Sony came with its label division to 20.8 percent. The subsidiary of the Japanese electronics group maintained its leadership in the publishing sector with 24.5 percent to 23 percent, just ahead of Universal. However, the market for music recordings is not only significantly larger in terms of volume, the margins are too. Above all, due to the streaming boom, this market grew to $ 21.6 billion in 2020 for the sixth year in a row. In 2014 it was around $ 14 billion.
Bolloré waited patiently
Vivendi reckons with a market valuation for Universal of 33 billion euros, but estimates like those of Bank of America even reach almost 50 billion euros. If you look at the market valuation of the parent company Vivendi, which is currently around 35 billion euros, you will recognize the dilemma of the French group: All business areas besides Universal are worth next to nothing in the eyes of investors, including the television and film areas of Canal Plus and Studiocanal, the Havas advertising agency, the computer game provider Gameloft, the book publisher Editis and the magazine business with Prisma Media and, for example, the French editions of Geo and Capital. Investors have been pushing for years to free Vivendi from the conglomerate discount customary on the stock market and to separate Universal in order to give the music company a sharper stock market profile.
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To the detailed view
Vivendi major shareholder Vincent Bolloré has patiently waited for a good time and cleverly prepared the IPO by selling off minority shares beforehand. In August, a good 7 percent went to the American William Ackman’s investment fund for $ 2.8 billion, which he then topped up to 10 percent. Vivendi had previously given 20 percent for 6 billion euros to a consortium led by the Chinese company Tencent. For comparison: in 2013, a year before Bolloré joined Vivendi, the Softbank Group submitted an offer for Universal of 6.5 billion euros – today the value is five times as high.
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