Vivendi has agreed to sell 10 percent of Universal Music into some so-called blank check company endorsed by hedge fund billionaire Bill Ackman for roughly $4 billion.
The deal had been supported by Vivendi (VIVEF) and Pershing Square Tontine Holdings, Ackman’s unique purpose acquisition company (SPAC), in announcements on Sunday. SPACs generally raise money from shareholders prior to going on a search for takeover targets.
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Universal Music Group (UMG) asserts to possess the rights to the world’s largest assortment of audio and is currently home to celebrities like Kanye West, Taylor Swift, Ariana Grande, Billie Eilish, and Justin Bieber.
Discussions involving the SPAC and Vivendi were originally declared earlier this season. The French media giant said Sunday it expects the deal to close no later than September 15.
When finalized, the intricate arrangement would mark the largest SPAC trade thus far, according to the Wall Street Journal, which first reported news of this offer.
That is the 2nd huge investment in UMG lately. A group of shareholders headed by Chinese streaming giant Tencent Music (TME) purchased a 20% stake late annually.
“Following the 20% equity stake obtained by the consortium headed by the Tencent group, the coming of significant American investors supplies additional proof of UMG’s international success and beauty,” Vivendi said Sunday.
In its announcement, Ackman’s SPAC emphasized UMG’s”tactical characteristics and competitive benefits” such as”predictable, recurring revenue streams which need minimal funding despite high growth”
It added that it considers”global customer adoption of streaming will create several years of growth”
New releases from Justin Bieber, in addition to earnings from The Weeknd, Ariana Grande, and Pop Smoke helped increase UMG earnings in the first quarter of the year, up 9.4percent in contrast to 2020. First-quarter earnings released by Vivendi also said the resale of vacationing for much of 2020 and to 2021 was damaging merchandising and other earnings, which have been down 10 percent in the quarter.
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The trade comes before Vivendi’s intends to spin off UMG through a listing on the Amsterdam stock market in late September. Vivendi’s investors will get 60 percent of Universal’s stocks.