It’s a thunderous start. Universal Music Group (UMG) greatly seduced investors on Tuesday, the day it was floated on the Amsterdam Stock Exchange. Its title was initially offered at 18.50 euros, based on a valuation of 33 billion euros. And he pranced at 25 euros (+ 35%) at the end of the morning. At the same time, the title of Vivendi, former parent company of the major, world number one in music, fell sharply, by nearly 14%, to 11.22 euros.
On the one hand, the markets seem to be very optimistic about the future of UMG. If the major suffered from a significant drop in record sales, in particular since the coronavirus crisis, it has perfectly negotiated the digital shift. Evidenced by its revenues from listening to music online, which grew by nearly 25% in the first quarter.
UMG, a cash machine
On the other hand, investors integrate the fact that Vivendi will now have to compose without its major, who has been the locomotive of the group in recent years. In the first half of the year, UMG’s net profit amounted to 452 million euros, or nearly 93% of that of the media giant controlled by Vincent Bolloré. The champion of the music industry, ahead of Sony and Warner, also weighed nearly half of Vivendi’s 3.8 billion euros in turnover during the same period. Nothing less !
Now, Vivendi only has control of a little more than 10% of the capital of this nugget. Almost 60% of the capital of the major must be distributed to its shareholders. In this transaction, Vincent Bolloré and the Bolloré Group, Vivendi’s largest 29% shareholder, will own 18% of UMG. The Chinese giant Tencent has twice recovered 20% of the capital last year. While last spring, the American financier Bill Ackman took 10% for 3.5 billion euros.
Vivendi and life without UMG
The markets are now keeping their eyes on Vivendi. The media juggernaut and parent company of Canal Group (Canal +), advertising giant Havas, publisher Editis and mobile video game specialist Gameloft, will have to prove its industrial relevance. “There is now a real challenge to rebuild an attractive project within Vivendi without Universal”, underlines to The gallery Thomas Coudry, analyst at Bryan Garnier.
Vincent Bolloré’s group has already provided an answer. Last spring he grabbed hold of Prisma Media magazines (Current Woman, Tele-Leisure, Here, Capital Where Gala…). Last week, his staff mainly announced a takeover bid on Lagardère, now specializing in shops in stations and airports, and owner of the French number one publishing house Hachette, and media Europe 1, JDD and Paris Match. It is therefore a refocusing on the media and publishing that is emerging. At least for the moment. Difficult, however, to draw conclusions on the industrial ambitions of the group, in view of the appetite for financial blows of Vincent Bolloré.
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