Universal Music Group, the world’s largest record company, has discussed going private with a few prominent Wall Street firms, according to people familiar with the matter. Universal’s management held preliminary conversations with private equity firms including Apollo Global Management Inc., TPG Inc. and Blackstone Inc. earlier this year, said the people, who declined to be identified because the talks were confidential. The conversations haven’t progressed nor has Universal, home to acts including Taylor Swift, The Weeknd and Kendrick Lamar, begun a sales process. The company’s board is aware of the conversations, said the people. The company declined to comment, as did the private equity firms. Universal’s sagging share price has prompted many at the company and on Wall Street to wonder whether the music giant would be better off as a private firm. Shares in Universal have declined about 29% this year and are below the price at which the company first went public in 2021.
Universal, led by Chief Executive Officer Lucian Grainge, was already the target of one takeover attempt this year when shareholder Bill Ackman made an offer to buy the Amsterdam-listed company and move its listing to the US. Universal rejected the bid, but the company’s largest shareholder agreed with Ackman that the firm is undervalued. Universal is the largest and most successful of the three major record label groups, the distributor of nine of the 10 best-selling acts in the world last year. Sony Group Corp. is another major competitor.
Any deal would require the assent of the Bollore family, which owns more than 30% of the firm between the personal holdings of Vincent Bollore, Cyrille’s father, and Vivendi, their media company. Vivendi used to own Universal Music before the company was spun out as a separate public company. The Bollores haven’t signaled interest in selling their full position. Nor has Chinese internet giant Tencent Holdings Ltd., which owns more than 11%. Taking Universal public was lucrative for the Bollores and a handful of senior leaders who had stock. The company has since struggled to satisfy investors.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing