FROM UNIVERSAL MUSIC GROUP’S $40BN-PLUS VALUATION TO TOMMY BOY’S SALE: IT’S MBW’S WEEKLY ROUND-UP
Sir Lucian Grainge is clearly a master at solving professional challenges whenever they arise. But even he’s going to struggle to get all of Universal Music Group‘s institutional owners on a single Zoom call pretty soon: the time zones are going to play havoc.
This morning (June 4) we learned that Bill Ackman’s New York-based SPAC, Pershing Square Tontine Holdings (PSTH), is set to buy 10% of UMG from Vivendi in a $4bn transaction.
This won’t result in UMG merging in any way with PTSH. Indeed, Vivendi is still pushing ahead with its plan to spin out 60% of Universal on the Amsterdam stock exchange before the end of September.
Instead, if the PSTH deal and Amsterdam float both go through as intended, it will mean UMG ends up being owned thusly: 10% by US-based PSTH; 10% by France-based Vivendi; 20% by a consortium led by China-based Tencent; and 60% publicly traded in Europe.
Will any of these institutional owners want to fiddle with Universal’s current strategy, and its continued heavy investment in frontline A&R and marketing?
Perhaps not: Ackman was full of praise for Grainge and his executive leaders today, calling them “one of the most outstanding management teams that I have ever encountered”.
That said, PSTH is telling its own shareholders that UMG offers “predictable, recurring revenue streams that require minimal capital despite high growth”. (Every UMG label President before next year’s budget meeting: “No, no; he must have meant maximum capital…”)
Ackman is also very keen on UMG’s potential for “long-term margin expansion” – aka, the idea that the bigger streaming gets, the more profitable Universal Music Group becomes.
Vivendi will be loving this, of course: Ackman just set the expectation of a minimum $40 billion company valuation for UMG when that 60% shareholding is floated in Amsterdam in the coming months.
Elsewhere this week, well, it was a bit quiet… until today.
Today, we learned that French distribution/services company Believe has found raising €300 million très facile, as they say in Paris.
Denis Ladegaillerie and his company have already covered the entire book order of their IPO, which will see around 15% of Believe floated on the Paris Euronext – a process due to be completed next week.
Now, an apt musical interlude courtesy of Coolio: “Power and the money; money and the power / Minute after minute, hour after hour.”
Yes, we also learned today that New York-based Reservoir has acquired Tommy Boy Music in a $100 million deal – snapping up over 6,000 masters including Gangsta’s Paradise.
Reservoir is itself becoming a publicly-traded company at some point this year, via a SPAC merger with Roth CH Acquisition Co. II worth nearly $800 million.
BELIEVE EASILY ATTRACTS ENOUGH DEMAND TO EXECUTE €300M IPO… WITHIN THREE DAYS
According to reports in both Bloomberg and Reuters this morning (June 4), Believe has already attracted enough investor demand to cover the entirety of the order book for its IPO’s 15,384,616 initial share issue. It did so within the space of just three working days, following its Tuesday morning announcement.
Not only that, Believe has also secured maxed-out demand for a ‘green shoe’ allocation of additional shares, worth 10% of its initial issue.
In other words, it’s a safe bet that Believe has locked in IPO share sale orders that will raise the €300 million it wanted, plus 10% more (i.e. €330 million in total).
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