Shares of Vivendi rose almost 20% on Monday following its announcement at the weekend that it plans to distribute 60% of Universal Music’s capital to investors and aims to list the record label of Lady Gaga and Taylor Swift by the end of the year.
Shares in Bollore, majority holder of Vivendi, rose about 15%.
The weekend announcement follows the sale of a 10% stake in Universal Music to a consortium led by Tencent Holdings that valued the world’s biggest music company at €30 billion. The Tencent consortium now owns about 20% of Universal Music.
“Vivendi’s leading institutional shareholders have been pressing for a number of years for a split or the distribution of Universal Music Group (UMG) to reduce Vivendi’s conglomerate discount,” Vivendi said in a statement.
“Prior to considering a favorable response to this request, the management board wished to obtain a fair value for UMG to better serve the interests of its shareholders and therefore support the fulfillment of its development plan to become a global leader in content, media and communications.
“The chairman of the management board set a minimum target of 30 billion euros for UMG’s enterprise value.
“The transaction completed in recent days on that basis, for 10% of UMG’s share capital, resulting in 20% of the share capital now held by the Tencent-led consortium, as well as interests expressed by other investors at potentially higher prices, have now enabled the management board to consider a distribution of 60% of UMG’s share capital to Vivendi shareholders.
“This distribution, exclusively in kind, would take the form of an exceptional distribution (“special dividend”).
“The listing of the shares of UMG, a holding company currently being incorporated in the Netherlands, would be applied for on the regulated market of Euronext NV in Amsterdam, in a country which has been one of UMG’s historical homes.
“The transaction has received an initial favorable response from the Tencent-led consortium with whom the planned listing will be examined.
“A Vivendi extraordinary shareholders’ meeting will be called for March 29, 2021 to modify the company’s by-laws and make this distribution possible.
“Subject to a positive shareholder vote, Vivendi will continue to work on this project, including a shareholders’ meeting to approve the distribution and subsequent completion of the transaction before end 2021.
“In addition, the management board will also propose an ordinary dividend of €0.60 per share for the 2020 fiscal year at the shareholders’ meeting called to approve the company’s financial statements on June 22, 2021.
“The banks already mandated for the first steps necessary to fulfill Vivendi’s development plan will be involved in this process.”