Tencent leads consortium seeks 1 billion euro loan to buy 10% stake in Universal Music

On January 7th Bloomberg reported that a tencent-led consortium was seeking a 1 billion euro ($1.1 billion) five-year loan to buy a 10 per cent stake in UMG. Five banks, including Bank of America, Bank of China, HSBC, Industrial and Commercial Bank of China and Morgan Stanley, are expected to make joint loans.

Tencent leads consortium seeks 1 billion euro loan to buy 10% stake in Universal Music

Tencent announced on December 31, 2019 that a consortium led by Tencent had signed an agreement with Vivendi, a large French media group, to acquire a 10% stake in Universal Music Group from Vivendi, in a deal valued at 30 billion euros, meaning 10% The value of the equity is about 3 billion euros.

Universal Music is the world’s largest record label, featuring music by singers such as Taylor Swift, Beatles and Lady Gaga.

Tencent said its lead consortium includes Tencent Music and Entertainment Group (NYSE:TME) and several global financial investors.

According to Tencent, the consortium also has the right to acquire an additional 10% stake in Universal Music Group at the above valuation by January 15, 2021.

Following the completion of the transaction to invest in Universal Music Group, Tencent Music Entertainment Group and Universal Music Group intend to sign a second agreement granting Tencent Music Entertainment Group a subscription right to acquire a minority stake in Universal Music Group’s Greater China business.

The deal still needs regulatory approval and is expected to close by the end of the first half of 2020.

Tencent said Tencent and Tencent Music entertainment group will work with Vivendi to explore opportunities for entertainers and enrich the experience of music lovers to further promote the development of the music and entertainment industry.

As early as May 2017, Tencent Music and Universal Music announced a partnership, and according to a press release issued at the time, the two sides signed a strategic cooperation agreement on digital rights distribution in mainland China, tencent music entertainment (including QQ Music, Cool Dog Music, Cool Music) to obtain the global music library content and the world’s well-known singer resources operation, promotion, development and other rights.

Tencent’s Tencent Music and Entertainment Group was listed on the New York Stock Exchange in December 2018 and reported third-quarter 2019 revenue of 6.51 billion yuan, up 31% year-on-year and a net profit of 1.03 billion yuan, up 6.4% year-on-year. Online music paid users reached 35.4 million, with 661 million monthly active users.