Economy Vivendi first-quarter sales jump, company pushes on with UMG stake sale

Vivendi first-quarter sales jump, company pushes on with UMG stake sale

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Vivendi first-quarter sales jump, company pushes on with UMG stake sale

 French media conglomerate Vivendi posted higher first-quarter revenue on Monday, and said it was forging ahead with the planned sale of up to 50 percent of its UMG music arm.

Vivendi plans to sell the stake in UMG, whose soaring profit has been a key driver of the group’s stock price, in order to maximize UMG’s value and help fund the purchases of other businesses.

The growing public thirst for subscription and ad-based music streaming services, and the recent signing of several major license deals, have put the owners of music rights such as UMG in the spotlight of investors’ as they compete with streaming platforms such as Spotify.

Vivendi’s sales jumped 10.7 percent from last year to 3.46 billion euros ($3.91 billion), boosted by UMG and Vivendi’s recent acquisition of the Editis publishing business. A poll by In-Front Data for Reuters had forecast revenues of 3.39 billion.

Vivendi shares rose 1.1 percent as analysts welcomed more strong figures from UMG, which helped offset lower sales at Vivendi’s Canal Plus TV unit.

UMG’s revenues rose 22.9 percent from last year to 1.5 billion euros, helped by chart-topping songs from U.S. pop star Ariana Grande and sales from the soundtrack of hit movie “A Star Is Born”.

“UMG’s strong figures are timely, given Vivendi’s plans to sell up to 50 percent of the business, and they should help to bring about a high market valuation for UMG,” said Roche Brune Asset Management fund manager Gregoire Laverne.

Analysts at brokerage Liberum echoed that view, keeping a “buy” rating on Vivendi’s shares.

Vivendi has said it could sell up to 50 percent of UMG to one or several of its strategic partners. Analysts value the stake at between 20 billion euros and 40 billion euros.

“The process of selecting the potential partnering banks and the advisers should be completed shortly. PWC has been engaged to conduct the ‘vendor due diligence’, which is ongoing. It is expected to be completed in the coming weeks and will be provided to the selected banks,” Vivendi said in a statement.

Vincent Bollore, whose holding company Bollore Group owns about 26 percent of Vivendi’s share capital, is to be formally replaced by his son Cyrille on the company’s board this month.

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