In a memo to staff, UMG chairman and CEO Lucian Grainge called the deal "an exciting development reflecting a strong validation of our business strategy, our incredible team and your excellent work. It also reflects our shared optimism about UMG’s continued role as the driving force in our industry and how focused we are on the future."
Tencent also has a one-year "call" option to buy another 10% stake on the same terms. An additional agreement is already in the works that would allow Tencent Music to acquire a minority share capital of UMG’s subsidiary in Greater China.
"Vivendi is very happy with the arrival of Tencent and its co-investors," Vivendi said in a press release. "They will enable UMG to further develop in the Asian market."
Added Tencent, "Tencent and the consortium members are excited to support UMG’s growth through this investment. Together with Vivendi, Tencent and Tencent Music Entertainment will work to broaden the opportunities for artists and to enrich experiences for music fans, further promoting a thriving music and entertainment industry."
Consistent with previous statements that it planned to sell up to half of UMG, Vivendi also announced on Tuesday that negotiations have begun on the potential sale of an additional minority share of the music giant — at a price at least matching the terms with Tencent.
The company said in its most recent earnings report that it is pursuing options to sell an additional minority stake to other partners, "some of whom have already expressed an interest in investing at a similar price level," they said at the time. Vivendi confirmed in July it had hired an investment bank to advise on transactions.
UMG is of course a major earner for Vivendi. Third-quarter revenues at the music giant were up 15.7%, to $1.733 billion, Vivendi reported in October, contributing to a revenue spike at the media conglomerate of nearly 14 percent, to $8.1 billion. Recorded music posted $1.538 billion, while music publishing continued to outperform with revenue growing to $327.6 million.