KKR, China's Tencent Eyeing Bids For Universal Music

U.S. buyout fund KKR and China’s Tencent Music Entertainment Group are exploring rival bids for up to half of Vivendi’s iconic Universal Music division, a deal potentially worth up to 20 billion euros ($23 billion), sources told Reuters.

French tycoon Vincent Bollore, who controls Vivendi with a 25 percent stake, is in the process of selecting banks to oversee a partial sale of Universal Music Group (UMG), two sources familiar with matter said.

Sell-side banks are expected to be appointed in March, with a process likely to kick off in the second quarter, they said.

But informal discussions with potential bidders are underway as banks are trying to gauge appetite for the unit.

UMG is the world’s biggest music label ahead of Sony Music Entertainment and Warner Music, and is home to artists like Lady Gaga, Taylor Swift, Drake and Kendrick Lamar.

Greg Maffei

According to Music Business Worldwide, another name which has been bandied around in relation to a UMG sale is Liberty Media. Indeed, Liberty CEO Greg Maffei, speaking in November last year, told his investors that Liberty would “absolutely” be interested in taking a closer look at a UMG stake purchase at the right time.

Yesterdayt, Maffei has doubled down on that opinion – with an interesting caveat.

Speaking to analysts following the full-year results announcement of Liberty Media Corp, Maffei reiterated his company’s interest in Universal as an asset.

Liberty is the majority owner of SiriusXM – which itself fully owns Pandora. Liberty also owns a third of Live Nation (and therefore Ticketmaster), in addition to a small stake in music streaming service, JioSaavn.

In addition, thanks to some debt ownership, Liberty will control a piece of iHeartMedia when the broadcast company emerges from bankruptcy later this year, while it is expected to subsequently try and increase this stake.

When asked a question on Universal Music Group yesterday, Maffei said: “If you look at [SiriusXM], one of the largest, if not the largest cost they have is to the content suppliers… [so] understanding how you might hedge some of those costs is interesting. An ownership stake in Universal Music could [therefore] be interesting.”

He added: “I was asked [in November], would you look at [Universal]? Of course. It’s huge supplier to us and an important constituent in the music space. So [when] Vivendi announced that they were going to potentially seek partners, we certainly would express interest.”

Yet Maffei also hinted at something which is likely to become a very interesting conversation point for Vivendi in the coming months.

“That [possibility of a Universal buy] is really only going to be true on the right terms and conditions,” he said, before revealing what exactly he was hinting at: “Would we prefer a path to control? Usually in life we do, but also it would depend on what else is available, what else is offered, and whether that’s attractive in the total.”