Universal Music Group (UMG) Shares Up Over 35% in Market Debut

UTC by Steve Muchoki · 3 min read
Universal Music Group (UMG) Shares Up Over 35% in Market Debut
Photo: Depositphotos

Universal Music Group went public by listing on the Euronext Amsterdam stock exchange on Tuesday.

Universal Music Group alias (UMG) saw its shares surge nearly 40% in Europe’s largest listing of the year so far. According to news outlet CNBC, UMG shares were trading as high as 25 euros, whereas the reference point was set at 18.5 euros.

Consequently, UMG saw its market valuation scale to over 45 billion euros on Tuesday. Notably, Universal Music Group went public by listing on the Euronext Amsterdam stock exchange on Tuesday. As a result, French media group Vivendi shareholders will own approximately 60% of the company’s shares. This follows the prior spin-off that occurred back in June. Notably, controlling shareholder Vincent Bollore is expected to receive shares worth approximately 5.9 billion euros.

However, Vivendi is expected to own approximately 10% of the UMG  stake. Notably, Chinese tech giant Tencent owns 20% of the company’s stake. Tencent acquired 10% of Universal Music Group in March 2020 for €3 billion and acquired an additional 10% stake in January 2021.

The remaining 10% of the UMG stake is owned by billionaire William Ackman’s hedge fund Pershing Square. Operating in more than 60 countries, Universal Music Group prides itself as a top music company alongside Warner Music Group and Sony Music.

As the entertainment industry evolves with the new world order initiated by the Covid pandemic. Universal Music Group is strategically poised to take over the industry by storm. “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 runway ahead,” noted Universal Chairman and CEO Lucian Grainge.

Mind you, Grainge is set to receive bonuses amounting to $400 million following a successful listing of the company.

Universal Music Group Shares and the Market Outlook

Universal Music Group enters the public market at a time when the entertainment industry is changing solely to the online market. Moreover, the COVID-19 pandemic hit live concerts and the company’s merchandising business. However, the company’s ad sector recorded a notable spike in revenue reported during the pandemic.

Notably, the company has ostensibly recorded revenue growth for the past six consecutive years. Forward, the company has forecasted that it may see an increment but of up to 10% by the end of 2021.

Earlier this year, the United States regulators declined a 10% UMG acquisition plea by Pershing Square Tontine Holdings, a special-purpose acquisition company run by investor Bill Ackman.

The company will now be in a better place to penetrate the global market as a public company based on its capital backings.

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Steve Muchoki
Author Steve Muchoki

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