Vivendi Sets Date for Universal Music Group Spinoff  

Universal Music Group logo.
Courtesy of UMG

Universal Music Group logo.

Shares of Universal Music Group will begin trading on the Amsterdam Euronext market “before or by” Sept. 27, parent company Vivendi revealed on Wednesday (May 12). Vivendi’s proposal for the UMG share distribution will be put to a vote at the company’s shareholders’ meeting on June 22.

Vivendi’s largest institutional shareholders “have been calling for the split or distribution” of UMG to better reflect the fast-appreciating value of its music division, according to Wednesday’s report. Vivendi’s own valuation suggests UMG is being grossly undervalued: on Wednesday, Vivendi’s market value on Wednesday was 32.4 billion euros ($39.11 billion), slightly below Vivendi’s estimate of 33 billion euros ($39.84 billion) for UMG — even though UMG accounted for 45.8% of Vivendi’s first-quarter revenue.

The shares distributed in the dividend will account for 60% of the share capital and voting rights of Universal Music Group. Based on the 33 billion euros valuation, the holders of 91.63% of Vivendi’s shares would receive 60% of UMG’s share capital — meaning 1% of Vivendi share capital receives 0.655% of UMG’s share capital.

A consortium of investors led by Tencent owns 20% of Universal through two investments at a 30 billion euros valuation. Vivendi will keep the remaining 20% of shares and retain “at least 10%” of UMG’s share capital over the long term. However, Vivendi “continues to receive expressions of interest from potential investors” and may sell some of its UMG shares either before or after the distribution of UMG shares.