After buying a 10% stake in the music corporation Universal Music Group (UMG) for a price of $3.4 billion last year, a consortium of investors led by the Chinese tech giant Tencent has announced that it’ll exercise a call option to acquire a further 10%, an option that was gotten under the terms of the initial 10% acquisition.

The consortium led by Tencent will purchase its stake for the same price of 3 billion Euros which it paid in the previous deal, whereas currency fluctuations makes the acquisition price the equivalent of $3.7 billion now compared to $3.4 billion in the previous deal. 

The newly announced deal values UMG at 30 billion Euros, unchanged from that of the previous deal. UMG remains controlled by its owner, the French media conglomerate Vivendi, which has owned it since its formation as a separate entity in 2006.

Notably, Vivendi has said that it’s pursuing an IPO for Universal Music Group by 2022 at the latest, an IPO that’ll see the biggest music company in the world and one of the “Big Three” record labels along with Sony Music and Warner Music Group hit the public markets.

Tencent is a strategic investor in Universal Music Group, having partnered with the music company to boost its own music efforts in the Chinese market. Tencent controls the Tencent Music Entertainment Group, an NYSE-listed subsidiary that develops music streaming apps for the Chinese market and posted $3.65 billion in revenue in its most recent fiscal year.

Working hard to expand its music business, Tencent has sought several strategic partnerships and found a major one in UMG. Its acquisition of a further 10% stake in the company is expected to be completed in the first half of next year.

Photo: Tencent CEO Ma Huateng, credit; fortuneglobalforum is licensed under CC BY-NC-ND 2.0

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