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AFP

on 09/20/2021 at 8:52 a.m.

4 min read

The powerful major of the music industry Universal Music (UMG), a subsidiary of Vivendi, will go public on Tuesday in Amsterdam. This introduction highlights the renewal of a successful company and yet another financial blow for Vincent Bolloré.

When Vincent Bolloré took control of Vivendi in 2014, he got his hands on this musical subsidiary managed in Santa Monica, at the gates of Los Angeles (California), which went through the MP3 and piracy crisis with the two other giants in the sector. Warner and Sony.

The group is the owner of the famous Abbey Road studios which housed the Beatles and Lady Gaga, as well as Kanye West and Amy Winehouse, of EMI Records (Justin Bieber, Keith Richards, Metallica) and Capitol Records (Katy Perry, Paul McCartney) .

In 2020, he also offered the rights to the entire catalog of Bob Dylan songs, one of the most significant acquisitions in the history of music.

Thanks to the boom in streaming and unlimited subscription listening offers, UMG has become Vivendi’s goose that lays golden eggs, generating in 2020 € 7.4 billion in revenue, i.e. 46% of the group’s income.

For the management of Vivendi, owner in particular of the Canal group, the communications giant Havas and the publisher Editis, the time has come to let Universal continue on its own and to refocus Vivendi on publishing, advertising and media.

Perhaps she considers that with a valuation of over 30 billion euros when the 20% was sold to a consortium led by the Chinese Tencent, then the 10% ceded to financier Bill Ackman, the value of UMG is near its peak.

“We are creating the conditions so that the valuation of Vivendi as a whole is greater than the sum of the parts which compose it”, justifies the chairman of the management board Arnaud de Puyfontaine who sees “bridges between publishing and audiovisual, between the gaming (video game) and live performance, between music and advertising “.

While the valuation of the French giant has hitherto relied heavily on UMG, “we will have to demonstrate that there are really synergies within the group”, analyzes Thomas Coudry, of Bryan Garnier & Co.

But the operation pursues another goal: by distributing 60% of UMG to its shareholders via an exceptional dividend in kind, Vincent Bolloré first serves himself by recovering 18% of the shares (around 6 billion euros). .

Better, it does so by minimizing its tax under the tax exemption of dividends between a group and its subsidiary within the European Union. And, thanks to the 10% retained by Vivendi and to concerted management announced with Tencent, he will retain a certain influence in the major.

Finally, Vivendi, whose cash is now full but which fears a hostile transaction on the occasion of the expected drop in its price following the detachment of UMG, took advantage of the enthusiasm of its shareholders to obtain authorization to buy back. up to 50% of its own shares.

This “rather extraordinary” limit, according to an activist who had expressed his reservations about the initial project, is sold as a means for the group to defend itself against any hostile attack before the redeployment of its activities.

Vivendi announced on Wednesday that it intended to swallow Lagardère by the end of 2022, and remains committed to the operator Telecom Italia.

But some analysts also see it as a possibility for Vincent Bolloré to strengthen considerably at a lower cost in Vivendi’s capital if these titles were to be canceled.

The Bolloré group has however committed itself in a letter: if it were to cross the threshold of 30% of the capital in this way, it would not derogate from its obligation to file a takeover bid on Vivendi.

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