French tycoon faces major music deal

Vincent Bollore will own $ 7 billion in shares following Universal Music Group's initial public offering next week. This begs the question of how the French tycoon could capitalize on this new source of money as Universal parent company Vivendi (OTC: VIVHY) chart a new course. Bollore, Vivendi's top investor who led the spin-off of the world's largest music label with artists like Lady Gaga and the Rolling Stones, will be one of the deal's biggest winners, according to the prospectus released on Tuesday. The IPO of Universal with an estimated equity value of 33 billion euros (39 billion USD) includes the distribution of 60% of the shares to Vivendi shareholders. Bollore is said to receive about 18%, which equates to a value of 5.9 billion euros ($ 7 billion). "The question now is what he will do with his stake," said a source familiar with the transaction. "He could use the money he received from this in other ways. Universal's IPO, the largest to date in Europe this year, attracted international attention after Vivendi sold 20% of the business to a group led by Chinese tech giant Tencent and 10% to Pershing Square owned by US billionaire Bill Ackman . Vivendi, now part of the Bollore family empire, has invested in a number of companies including the Lagardere media and publishing group and Telecom Italia (MI: TLIT). With Universal's spin-off from Vivendi, the Paris-based corporation is losing its most valuable asset and is likely to push its parent company's share price down after the spin-off. The media company expects its shares to trade at a lower price when Universal shares trade on Amsterdam's Euronext Stock Exchange on September 21, Universal said in its prospectus. For Bollore and Vivendi, the spin-off from Universal aims to get the maximum value possible from their precious asset as streaming revenues help the music industry recover from a downturn. Universal, whose other hit singers include Justin Bieber and Taylor Swift, sees itself as indispensable for artists looking to collect royalties in distant places and via social media - an impossible task even for big stars, let alone smaller ones. In the 2000s, artists and record companies suffered revenue losses from digital music piracy and a shrinking market for physical media such as CDs. The tide turned in the mid-2010s when subscription services like Spotify (NYSE: SPOT) helped boost royalty income again. In addition, the explosion of music on ad-supported social media platforms such as YouTube and TikTok has started to benefit record companies as they make arrangements to get a share of ad revenue for user-generated "content that includes music clips." Universal posted sales growth for six consecutive years, reporting core earnings of € 1.49 billion on sales of € 7.43 billion for 2020.