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Vivendi’s shareholders approve Universal Music Group spin-off

By Andrei Chirileasa

12:37, 22 June 2021

Universal Music Group logo

French media group Vivendi has secured almost unanimous approval from its shareholders for the spin-off of Universal Music Group (UMG), the world’s biggest music label.

Close to 99.9% of Vivendi’s shareholders who participated in the company’s Ordinary Shareholders’ Meeting on 22 June voted in favour of Resolutions 5 and 6, which set the terms for the special distribution-in-kind of Universal Music Group shares to Vivendi shareholders.

The result of the vote represents a victory for Vivendi’s biggest shareholder, French billionaire Vincent Bollore, who proposed this demerger.

The UMG spin-off will be carried out through an in-kind distribution of Vivendi’s undistributed profits up to 30 June 2021. Vivendi’s shareholders will get about 60% of Universal Music Group’s shares worth approximately €19.8bn ($23.6bn), or one UMG share for each Vivendi share held.

The final distribution ratio may vary based on the price at which the UMG shares debut on Euronext Amsterdam. The company’s listing is scheduled for 21 September 2021, provided the Dutch financial regulator’s approval comes on 14 September, Vivendi representatives told the shareholders.

Vivendi’s crown jewel valued at €33bn

The size of the in-kind distribution of UMG shares to Vivendi’s shareholders was determined based on a total valuation of €33bn for the music label, which is not far from Vivendi’s current capitalisation of €34.4bn. The valuation was carried out by PricewaterhouseCoopers (PwC) and Ernst & Young (EY).

In 2020, Universal recorded its sixth consecutive year of revenue growth, despite the pandemic. The label saw high sales by some of the most popular international artists, including Drake, Juice WRLD, J Baldwin, The Weeknd and Taylor Swift. It also works with Billie Eilish, Post Malone, Adriana Grande and Lady Gaga.

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Universal Music holds the rights to creations by renowned artists such as The Beatles, The Rolling Stones, U2, Queen and Andrea Bocelli. In December 2020, it also bought Bob Dylan’s entire catalogue of more than 600 songs in a blockbuster deal.

Universal’s revenues went up 3.8% in 2020 to €7.43bn while its EBITDA advanced by 18.3% to €1.33bn, amounting to 81% of Vivendi’s EBITDA, according to the group's annual results.

A consortium of investors led by the Chinese group Tencent currently owns a 20% stake in UMG. Vivendi has reached an agreement with US hedge fund Pershing Square to sell another 10% in the company for around €3.5bn before the listing. The French group will keep about 10% of UMG’s shares after the company’s listing.

Vivendi also pays dividends for 2020

Vivendi’s shareholders also approved the payment of an ordinary dividend of €0.60 per share for the fiscal year 2020. The dividend will be paid from 25 June 2021, with an ex-dividend date of 23 June, the company said.

The dividend yield based on the current share price is approximately 2%.

Vivendi’s shares were trading at around €29 on Tuesday after the shareholders’ meeting, up by 0.5% compared to the previous day. Year-to-date, Vivendi stock is up 10%, compared to an 18.3% increase for the French blue-chip index CAC 40.

Read more: Activist fund challenges Vivendi over music group spin-off

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