“Money, money, money”: Abba’s 1976 hit could fortuitously be brought up to date for the entry on the Amsterdam Stock Exchange on Tuesday September 21 of Universal Music Group (UMG), Vivendi’s most profitable subsidiary. The process of introducing the world’s leading major is expected to be carried out on the basis of a market value of 33 billion euros – nearly five times its 2014 valuation (7 billion euros). Euronext will give the exact reference price the day before, Monday evening September 20.
This transaction provides for a distribution of 60% of UMG’s capital to current Vivendi shareholders. Once listed, the major, which includes in its catalog Elton John, Paul Mc Cartney, the Rolling Stones but also The Weeknd, Eminem or Selena Gomez, will be 20% owned by the Chinese technology champion Tencent – who bought his shares in 2020 and 2021 on the basis of a valuation of 30 billion euros -, 18% by family companies of Vincent Bolloré, 10% by the American billionaire Bill Ackman – who completed his transaction up to 3.5 billion euros this summer -, and 3.28% by Société Générale. Vivendi will retain a residual share of 10%, while the remainder will constitute “the free float” on the stock market.
A lasting manna
The voluminous 306-page Amsterdam Stock Exchange pre-admission prospectus is full of information about UMG. The group chaired by Sir Lucian Grainge is thriving despite the Covid-19 pandemic. Its turnover increased by 3.8% in 2020, to 7.4 billion euros, after a jump of 18.8% the previous year. And its current operating income grew by 18% compared to 2019, to 1.37 billion euros.
If UMG is proud of a long list of world stars like Drake, Billie Eilish, Lady Gaga or Tailor Swift, no artist represents more than 1% of its turnover. But the first fifty artists accumulate 23% of sales. UMG considers that its financial success “Depends and will depend on its ability to sign new artists”. Make way for young talents – and those who will win as long as possible -, since 54% of UMG’s income comes from catalog music (which is more than three years old). The indestructible standards of Abba, the Beatles, James Brown, Marvin Gaye but also Bob Marley and Amy Winehouse are therefore a lasting manna.
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