French media giant Vivendi seems to be a bit short of cash, so it’s thinking of selling 10% of Universal Music to Tencent for three billion euros.
Vivendi primarily concerns itself with the TV and music businesses, having flogger SFR to Altice a few years ago, but that hasn’t stopped it trying to run Telecom Italia despite being a minority shareholder. It has historically been frantically active in terms of M&A and rarely seems to hold on to an acquisition before looking to sell it on
Tencent is a Chinese internet giant that owns IM service WeChat, the Chinese equivalent of Twitter – Weibo, loads of other digital stuff such as gaming and ecommerce, and most of China’s music services. It’s one of the world’s biggest technology companies and is no less fond of M&A than Vivendi.
“Vivendi and Tencent are also concurrently considering areas of strategic commercial cooperation,” said the announcement. “In this context, Vivendi is keen to explore enhanced cooperation which could help UMG [Universal Music Group] capture growth opportunities offered by the digitalization and the opening of new markets.
“Together with Tencent, Vivendi hopes to improve the promotion of UMG’s artists, with whom UMG has created the greatest catalogue of recordings and songs ever, as well as identify and promote new talents in new markets. Vivendi hopes that this new strategic partnership could create value for both Tencent and UMG.”
While improved access to the Chinese market is definitely a positive for UMG, that bit of narrative also feels like an attempt to make this move seem more about business strategy and less about Vivendi needing to raise some cash. Three billion euros would buy you around 30% of Telecom Italia at today’s prices, which would give Vivendi a majority stake. Just saying.