Universal Music dances to $55 billion in electric stock market debut (updated)

Pershing Square Holdings

21/09/2021 15:44

* Shares surge almost 40% in early trade
    * Biggest European listing of the year
    * Listing is a coup for Amsterdam exchange

 (Updates with graphic. Adds TV.)
    By Toby Sterling and Sudip Kar-Gupta
    AMSTERDAM, Sept 21 (Reuters) - Universal Music Group's
 UMG.AS  shares leapt 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 catalogues from Billie Eilish to The Rolling Stones and
Bob Dylan, saw its market value leap to 47 billion euros ($55
billion) in Europe's largest listing of the year. 
    The company was spun off by France's Vivendi  VIV.PA , which
handed a 60% stake in Universal to its shareholders. Vivendi saw
its market value drop by two thirds to about 12 billion euros,
according to Refinitiv data, as it refocuses on other media
assets such as pay TV brand Canal+.
    Big winners from the Amsterdam listing include U.S. hedge
fund billionaire William Ackman and China's Tencent  0700.HK ,
alongside Vivendi's controlling shareholder Vincent Bollore, who
are retaining large slices of Universal.  urn:newsml:reuters.com:*:nL1N2QM1FH    
    Universal Chairman and CEO Lucian Grainge will also get
bonuses linked to the listing that a source close to the company
said would amount to at least $140 million.
    Universal's shares were trading at 24.97 euros by
mid-session trading, up around 35% from their reference price of
18.50 euros. Shares in Bollore  BOLL.PA , which holds 27% of
Vivendi, were up 2.4%, while the Amsterdam-listed shares of
Ackman's Pershing  PSH.AS  were up 4%.
    At that price, Universal - the biggest of the "big three"
record labels - trades at a 25% premium to its only listed
competitor, Warner Music  WMG.O , said analyst Matti Littunen of
Bernstein. Both compete with Sony Music  SONY.K .
    "No sign of a European discount here," Littunen said in a
note, adding that the stock's performance would reduce pressure
to seek a dual U.S. listing for Universal, which is based in
Hilversum, Netherlands, but has headquarters in Santa Monica,
California.
    The strong debut is also 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. 
    Ackman, whose grandfather was a songwriter, 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%. 
    
    BEATLES TO BIEBER
    Amid the streaming boom https://datawrapper.dwcdn.net/6q2hD/4,
 Universal - whose other hit singers and catalogues include
Justin Bieber and The Beatles - hopes to build on deals with
ad-supported sites such as TikTok and YouTube as well as
streamers led by Spotify.
    "I believe that we're only at the beginning of the next wave
of growth as music subscription and ad-supported consumption is
scaling globally and has a long runaway ahead," Grainge told
Reuters.
    Part of Universal's business derives from the rights
attached to its huge catalogue, and it also collects royalties
for the artists it represents across social media platforms and
performance fees whenever their songs are played. 
    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 Vivendi, which hopes
to rid itself of a conglomerate discount that it believes has
weighed on its shares.
    Vivendi said last week it was set to purchase another stake
in Lagardere, paving the way for a potential full takeover of
the Paris Match magazine owner.  urn:newsml:reuters.com:*:nL1N2QH258
    Universal has increased sales for six years in a row, with
core earnings of 1.36 billion euros in 2020 on revenue of 7.43
billion euros. It has forecast revenue growth of at least 10%
this year and in the high single digits after that.  urn:newsml:reuters.com:*:nL8N2PW4LP
    The listing is the latest win for Euronext in Amsterdam,
which has grown as a financial centre since Britain's departure
from the European Union. Before Universal, Amsterdam had
attracted a record 14 IPOs this year.
    The deal was handled by 17 banks which are expected to make
a combined $60-$65 million in fees from advising Vivendi and
Universal, with BNP Paribas and other lead advisers taking the
largest share, according to Refinitiv estimates. 
    ($1 = 0.8522 euros)

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Universal to list as music streaming picks up     ID:nL1N2QG0O5 
BREAKINGVIEWS-Universal spin makes case for even slimmer Vivendi
    urn:newsml:reuters.com:*:nL8N2QN1ZH
Recording industry in a groove as streaming revenue grows    https://datawrapper.dwcdn.net/6q2hD/4/
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Toby Sterling in Amsterdam, Sudip Kar-Gupta,
Gwenaelle Barzic, Mathieu Rosemain in Paris, and Pamela
Barbaglia in London
Writing by Ingrid Melander and Sarah White
Editing by Mark Potter and Pravin Char)
 ((sudip.kargupta@thomsonreuters.com; +33 1 49 49 53 84;))