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Tencent to Buy 10% Stake in Universal Music Group

Deal values music company at roughly $33.7 billion

China’s Tencent Holdings announced on Tuesday that it has led a consortium of companies that have bought a minority stake in Universal Music Group (UMG), one of the most prominent music companies and home to Taylor Swift, Drake among others.

Tencent signed an agreement with UMG owner Vivendi to acquire a 10% stake in a deal that values the music company at 30 billion Euros, or roughly $33.7 billion.

The Tencent-led consortium is joined by Tencent Music Entertainment Group and other global financial investors. The two companies expect the deal to close in the first half of 2020.

The consortium will have the option to acquire an additional 10% equity stake in UMG until Jan. 15, 2021. Tencent and UMG also intend to enter into another agreement giving Tencent’s music business the opportunity to acquire a minority equity stake in UMG’s Greater China business.

“Vivendi is very happy with the arrival of Tencent and its co-investors. They will enable UMG to further develop in the Asian market,” the two companies said in a joint statement. “Tencent and the Consortium members are excited to support UMG’s growth through this investment. Together with Vivendi, Tencent and TME will work to broaden the opportunities for artists and to enrich experiences for music fans, further promoting a thriving music and entertainment industry.”

UMG, in its most recent quarterly report, said revenues were up roughly 20% to 1.8 billion Euros. The company’s music revenue was bolstered by the growth in subscription and streaming revenue, as well as strong physical sales.

UMG’s best-sellers in 2019 were the new releases from Billie Eilish, Ariana Grande, Taylor Swift, Post Malone and the Japanese band King & Prince, as well as continued sales of the soundtrack from “A Star Is Born” and several albums from Queen.