Investors tune in as Universal leaps on market debut
The world's biggest music label, which represents musicians and song catalogues from Billie Eilish to The Rolling Stones and Bob Dylan, saw its market value leap to almost 47 billion euros ($55 billion) in Europe's largest listing of the year. The company was spun off by France's Vivendi, which handed a 60% stake in Universal to its shareholders.
Universal Music Group's shares leaped more than a third in their stock market debut on Tuesday as investors bet a boom in music streaming still has a long way to run. The world's biggest music label, which represents musicians and song catalogs from Billie Eilish to The Rolling Stones and Bob Dylan, saw its market value leap to almost 47 billion euros ($55 billion) in Europe's largest listing of the year.
The company was spun off by France's Vivendi, which handed a 60% stake in Universal to its shareholders. But that saw Vivendi's own shares plunge more than 20% as investors reassessed the media group's value without the music label. U.S. hedge fund billionaire William Ackman and China's Tencent - among the major winners from the Amsterdam listing, alongside Vivendi's controlling shareholder Vincent Bollore - are retaining large slices of Universal.
Universal's shares were trading at 25.70 euros by 0730 GMT, up by around 39% compared to its reference price of 18.50 euros. Shares in Bollore, which holds 27% of Vivendi, were up 2.8%, while Amsterdam-listed shares of Bill Ackman's Pershing rose by around 5%.
Universal's strong debut will be a vindication for Ackman, who was forced into an embarrassing u-turn after U.S. regulators blocked his plans to invest into Universal via his special purpose acquisition company (SPAC) in July. He instead opted to take a 10% stake via his main Pershing Square hedge fund, which is now sitting on a paper gain of more than 30%.
FROM THE BEATLES TO BIEBER Universal, whose other hit singers and catalogs include Justin Bieber and The Beatles, hopes to build on deals with ad-supported sites such as TikTok and YouTube as well as streaming services such as Spotify.
Part of its business derives from the rights attached to its huge catalog, and it also collects royalties for the artists it represents across social media platforms and in far-flung places. The COVID-19 pandemic hit live concerts and Universal's merchandising business, but ad-supported revenues have picked up after a blip.
Its flotation carries high stakes for Canal+ owner Vivendi, which hopes, in the long run, to rid itself of a conglomerate discount that it believes has weighed on its shares. Universal has grown revenue for six years in a row. It has forecast revenue growth of at least 10% this year and in the high single digits after that.
The listing is the latest win for Euronext in Amsterdam, which has grown as a financial center in the wake of Britain's departure from the European Union. Before Universal, Amsterdam had attracted a record 14 IPOs so far this year. Separating Universal from Vivendi deprives the Paris-based group of its most valuable asset. Vivendi said on Tuesday it would now own 10.13% of the share capital in Universal.
($1 = 0.8522 euros)
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