© Reuters. FILE PHOTO: Vincent Bollore, Chairman of the Supervisory Board of media group Vivendi, attends the corporate’s shareholders assembly in Paris
By Mathieu Rosemain and Sudip Kar-Gupta
PARIS (Reuters) – French tycoon Vincent Bollore will retain sturdy affect over Common Music Group as a serious shareholder following its deliberate 30-billion-euro ($36 billion) spin-off on the inventory market by media conglomerate Vivendi (OTC:) .
Vivendi is searching for to extract essentially the most worth from its crown-jewel asset, the world’s largest music label and residential to singers corresponding to Girl Gaga and Taylor Swift, because the music trade rebounds from an extended downturn due to streaming revenues.
The French conglomerate outlined plans on the weekend to distribute 60% of Common’s capital to its present shareholders through a list in Amsterdam.
The information triggered a rally in Vivendi’s shares in early Paris buying and selling on Monday, valuing the group near 31 billion euros ($38 billion).
Vivendi’s market worth is about the identical because the enterprise worth that it positioned on Common earlier than it bought two blocs of 10% within the music label to a consortium led by Chinese language group Tencent, in March 2020 and January this yr.
“The entire transaction is aimed toward releasing up the hidden worth of Vivendi, whose market worth has been inferior to that of Common’s itself recently,” a supply shut the matter mentioned.
On the finish of this IPO course of, which must be accredited by a shareholders assembly on the finish of March, Common’s three largest shareholders can be Vivendi (20%), the Tencent-led consortium (20%) and Bollore (16%).
As Bollore controls Vivendi through a 27% stake, this implies immediately and not directly he’ll management some 36% of Common.
Vivendi had beforehand mentioned that it will checklist Common by the beginning of 2023 on the newest.
Nevertheless a number of institutional buyers pressed the conglomerate to maneuver extra shortly, to benefit from monetary markets flush with low cost cash, prompting Bollore to speed up the timetable, in keeping with the identical supply.
Bollore selected Amsterdam over different worldwide monetary centres, corresponding to New York, to checklist the corporate, as a result of it’s “impartial” and extra engaging to potential buyers from China, together with Tencent, which had been focused by the earlier U.S. administration, the supply near the matter added.
MUSIC STREAMING BOOM
Common’s capital distribution will take the type of a particular dividend, below the plans to checklist the music label, which competes with the likes of Warner Music Group and Sony (NYSE:) Music Leisure.
A number of analysts welcomed the proposals, citing buyers’ unabated urge for food for content material suppliers after the itemizing of Warner, and the revival of the music trade on the again of streaming revenues.
“That is what many shareholders have wished and is a greater final result than Vivendi promoting a few of its UMG stake in an IPO,” JPMorgan (NYSE:) mentioned in a word, including that it estimated Common’s worth was about 40 billion euros.
After a 15-year downturn, the music trade has rebounded prior to now 5 years, with international recorded music revenues rising by 8.2 % in 2019 to $20.2 billion, in keeping with the most recent annual report by document trade commerce group IFPI.
Streaming revenues have represented the majority of the expansion over the pas few years, pushing the share of streaming revenues to 56% in 2019, pushed by 341 million paid subscribers.
Music streaming Spotify (NYSE:), the market chief, and rival Apple (NASDAQ:) Music are the driving forces behind that pattern.
($1 = 0.8244 euros)