Vivendi (OTCPK:VIVEF) owns 100% of Universal Music Group (UMG), with the unit contributing ~40% to revenue and ~70% to Vivendi’s value. While UMG already has strong traction in the US and Europe, the Chinese market remains a relatively untapped opportunity expected to drive further growth over the next few years. In that regard, the Tencent (OTCPK:TCEHY) deal couldn’t have come at a better time.
Vivendi already has a commercial partnership with Tencent, and this deal aligns Tencent’s success in China to UMG’s.
The bonus is that Vivendi received a valuation boost