China's Tencent To Acquire Stake In Universal Music Group

Tencent Holdings Ltd. is buying a 10% stake in the music giant behind Ariana Grande, Drake and Billie Eilish for $3.36 billion in a deal that bolsters the Chinese internet giant’s growing presence in the record industry.

The Wall Street Journal reports the company said Tuesday it was leading a consortium that has agreed to acquire a stake in Universal Music Group from Vivendi SA, valuing the world’s largest music company at €30 billion. The investment also gives Tencent the option to double its stake in the Los Angeles-based company.

The deal hands Tencent exposure to some of the biggest names in music—Universal’s stable also includes classic acts like Queen and the Beatles—and will strengthen the tech company’s dominance of the growing Chinese market.

Chinese consumers have quickly adopted to streaming-music services, showing a willingness to pay for the likes of Spotify Technology SA. Tencent Music Entertainment Group, the tech giant’s streaming business, went public in December 2018 in one of the biggest U.S. listings in recent years.

Tencent said a separate deal would follow soon allowing its streaming business to buy a minority stake in Universal’s Chinese operations.

For Vivendi, the stake sale allows the French company to cash in on a resurgent music industry and enables Universal to further develop in Asia.

The music industry is turning the page on an era of technological disruption that once bedeviled it. Universal, along with rivals such as Warner Music Group Corp. and Sony Corp.’s Sony Music Entertainment, now benefits from streaming services like Spotify and Apple Inc. ’s Apple Music, which have emerged as revenue growth drivers.