Vivendi is in talks to sell a 10% stake in its prized and lucrative Universal Music Group (UMG) to Chinese tech company Tencent as it seeks to expand its presence in Asia.
UMG is the world’s biggest music label ahead of Sony Music Entertainment and Warner Music, and is home to artists such as Lady Gaga, Taylor Swift, Drake and Kendrick Lamar.
Reuters report the French media conglomerate said on Tuesday that the deal would give UMG a preliminary equity valuation of $33.6 billion and that Tencent had an option to buy a further 10% of UMG.
Vivendi shares surged 7% as analysts welcomed the progress made on the sale of a stake in UMG and the valuation.
A deal with Tencent would boost UMG’s presence in the tightly controlled Chinese market and fit well with the Chinese company’s Tencent Music Entertainment (TME.N) unit.
Vivendi’s Chief Executive Officer Arnaud de Puyfontaine said last month that proceeds of the sale of up to 50% of UMG would be used for bolt-on acquisitions and “significant” share buybacks.
Controlled by billionaire Vincent Bollore, Vivendi is seeking to cash in on the growing public thirst for subscription and ad-based music streaming services, which have propelled UMG’s profits over the last four years.
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