Chinese tech firm to buy 10% stake in Universal Music Group

Chinese tech giant Tencent could soon own 10% of the music group behind Drake and Ariana Grande.

French conglomerate Vivendi confirmed Tuesday that it’s in talks to sell 10% of Universal Music Group to the gaming and social media company.

If the deal is completed, Tencent would have the right to purchase another 10% of the music group within a year at the same price. Vivendi would get to promote Universal artists on Tencent’s platforms.

Vivendi said in a statement that Universal Music Group would be valued at €30 billion ($33.6 billion) under the deal.

The Paris-based company said last year that it’s willing to sell up to half of Universal Music Group, a crown jewel of its media empire that has been revived by sales of streaming music.

It’s part of a move to cash in on the popularity of subscription and ad-based music streaming services. Vivendi has licensed a significant catalog of hits from artists like Abba and U2 to streaming services.

Arnaud de Puyfontaine, the chief executive of Vivendi, said previously that proceeds from the Universal Music Group sale would be used to buy back shares and acquire companies.

Online games account for some 30% of Tencent’s revenue. In the final quarter of 2018, the company was still suffering from China’s nine-month freeze on approval of new games.

In March, Tencent said a sharp fall in its profits was mainly due to costs related to the US listing of its streaming music subsidiary, Tencent Music, in December.

— Sherisse Pham contributed reporting.