FILE PHOTO: The Universal Music Group (UMG) logo is seen in a building in Zurich, Switzerland on July 20, 2021. REUTERS / Arnd Wiegmann / File Photo
September 21, 2021
By Toby Sterling and Sudip Kar-Gupta
Amsterdam (Reuters) – Shares of Universal Music Group jumped more than a third at the start of Tuesday’s stock market, and investors are betting that the music streaming boom will continue.
The world’s largest music label, representing musicians and song catalogs ranging from Billie Eilish to the Rolling Stones to Bob Dylan, has reached Europe’s largest catalog at a market value of nearly €47 billion ($55 billion). Rice field.
The company was divested by Vivendi in France, which transferred a 60% stake in Universal to shareholders. However, its stake in Vivendi fell by more than 20% as investors revalued the media conglomerate without a music label.
US hedge fund billionaire William Ackman and China’s Tencent, along with Vivendi’s controlling shareholder Vincent Bollor, are among the major winners of Amsterdam’s listing and hold most of Universal. ..
Universal shares were trading at €25.70 as of 0730 GMT. This is about 39% higher than the reference price of €18.50.
Bollor’s 27% stake in Vivendi increased by 2.8%, while Bill Ackman’s Amsterdam-listed stake in Pershing increased by about 5%.
Universal’s strong debut will be evidence that Ackman was forced to make an embarrassing U-turn after US regulators blocked plans to invest in Universal through its Special Purpose Company (SPAC) in July. ..
Instead, he opted to acquire a 10% stake through the main Pershing Square hedge fund. The fund currently generates over 30% paper profits.
From Beatles to Beavers
Universal, which includes other hit singers and Justin Bieber and The Beatles in its catalogue, is looking to do business with ad support sites like TikTok and YouTube, and streaming services like Spotify.
Part of its business derives from the rights associated with its vast catalog and also collects royalties for artists representing artists across social media platforms and far away.
The COVID-19 pandemic hit live concerts and the Universal merchandising business, but ad-supported revenue quickly recovered.
Its leverage has a big stake in Vivendi, the owner of Canal+. Vivendi wants to get rid of the mass discount, which it feels is putting pressure on its stock in the long run.
Universal has grown revenue for the sixth year in a row. Revenue growth is expected to be at least 10% this year, followed by high single-digit growth.
The list follows Euronext’s latest win in Amsterdam, which has developed into a financial hub following Britain’s withdrawal from the European Union. Before Universal, Amsterdam attracted a record 14 IPOs so far this year.
The separation of Universal from Vivendi deprives the Paris-based conglomerate of its most valuable assets. Vivendi announced Tuesday that it will own a 10.13% stake in Universal.
($ 1 = 0.8522 euros)
(Reporting by Toby Sterling, Supid Kar-Gupta, Writing by Ingrid Melander, Gwynell Barzik, Editing by Mark Potter, Sarah White)