Universal Music Explored Take-Private Deal with Buyout Firms, Report Says

Universal Music Group NV (AS:UMG) held preliminary discussions with several prominent private equity firms earlier this year about a potential take-private transaction, according to a Bloomberg report. The exploratory talks underscore growing frustration with the music giant's public market valuation, which has languished below its 2021 IPO price.

Exploratory Discussions

Citing people familiar with the matter, the report stated that UMG's management explored potential options with buyout firms including Apollo Global Management Inc., Blackstone Inc., and TPG Inc.

These discussions were reportedly conducted with the board's knowledge but were preliminary in nature and did not advance. Universal Music, which is listed in Amsterdam, has not launched a formal sale process.

Valuation Frustration

The outreach to private equity highlights dissatisfaction with the company's stock performance. Key points on its valuation include:

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• The stock has fallen approximately 29% this year.
• It currently trades below its 2021 initial public offering level.
• This has widened the gap between the company's public trading multiple and the premium valuations music catalogs command in private-market deals.

This valuation pressure comes despite Universal's market dominance, having represented nine of the ten best-selling global artists last year.

Shareholder Hurdles and Market Context

Any potential transaction would face significant obstacles, primarily from its largest shareholders. A deal would require the backing of the billionaire Bolloré family, which controls over 30% of the company through Vivendi SE and family holdings. In May, Cyrille Bolloré told shareholders he viewed the stock as "materially undervalued" and opposed selling too early.

Neither the Bolloré group nor Tencent Holdings Ltd., which holds an 11% stake, has expressed interest in divesting their positions. The talks also follow a failed takeover effort earlier this year by shareholder Bill Ackman and come amid broader investor concerns about slowing streaming growth and the potential for AI-generated music to dilute royalty streams.