The plan to sell up to a 50% stake in Universal Music Group was announced way back in July 2018. The major’s stunning performance since then has made it an ever-hotter property. So why is it taking so long?
Like a houseproud owner dragging their feet over the sale of their dream home, Vivendi has yet to even get as far as engaging a bank. In the meantime, most significant financial players are jockeying for that plum job by posting spiralling valuations of the company’s possible worth. With valuations ranging from $30-50 billion, it may be that UMG’s owner is happy to play a long game and watch its potential windfall grow and grow.
But the more being charged for the stake, the smaller the list of potential single investors becomes (multiple partners remain a possibility of course). And, while Vivendi dialled back from the possibility of a full IPO, the more money investors are required to stump up to buy in, surely the more likely they are to want more than just a minority say in its future?
After all, $25 billion could buy you 100% of pretty much anything else. How many people are there in the world prepared to lay down that sort of money without a path to full ownership being offered, at least at some point in the future?
One much-touted potential buyer, Liberty Media, has already said as much. Other reported contenders (Tencent, Google) certainly have enough cash to contemplate the full price without blinking.
Vivendi’s Vincent Bolloré is ultimately calling the shots, but you can’t see him approving anything without UMG boss Sir Lucian Grainge being heavily involved. UMG’s transformation into the group’s golden child has been remarkable – and, after all, it’s Sir Lucian and his team that have led that charge.
Indeed, even if little else has been achieved so far, the stake sale process has proved that, post-Spotify IPO, music in general, and Universal in particular, is a red hot investment. You can see why people want to buy it.
Yet, with Universal and the other majors dialling up huge profits off the back of a subscription streaming surge and projections for the wider business suggesting music could soon be bigger than ever, the bigger question may yet be: why would you want to sell it?
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