Universal Music Valued Around $39 Billion Ahead of Stock Market Debut

France’s Vivendi is spinning off Universal and on Monday set a reference price for the listing at 18.5 euros per share, according to a statement issued by Euronext.

Universal Music Group’s (UMG) listing will be Europe’s largest this year and will hand 60% of shares to Vivendi shareholders.

Universal is betting that a boom in streaming led by Spotify that has fuelled royalty revenue and profit growth for several years still has a long way to run, in a music industry it dominates along with Warner and Sony Music, part of Sony Group Corp.

Its flotation carries high stakes for Canal+ owner Vivendi, which hopes to rid itself of a conglomerate discount. However, the listing raises questions about Vivendi’s strategy once it parts ways with its cash cow, in which it will retain only a 10% stake.

Several high-profile investors have also already snapped up large Universal stakes, banking in part on the group’s back catalogue, which includes the likes of Bob Dylan and the Beatles. They also hope deals with ad-supported software and social media platforms such as Alphabet Inc’s YouTube and TikTok will sustain its performance and valuation.

U.S. billionaire William Ackman suffered a setback when his attempt to invest in Universal via a special purpose acquisition vehicle (SPAC) hit a snag with regulators and investors. However, Ackman still got a 10% stake via his Pershing Square hedge fund. China’s Tencent owns 20% of Universal.

One winner in the listing will be Vincent Bollore, the French media tycoon who is Vivendi’s controlling shareholder. He will receive Universal shares worth 6 billion euros at Monday’s price.

Bollore has been an aggressive consolidator in France’s media and publishing landscape, and he has a long-held ambition to build up a southern European media powerhouse.

Vivendi itself may suffer in the short run, however, and shares are expected to fall Tuesday as they begin trading without Universal.

BNP Paribas, Natixis, Credit Agricole, Morgan Stanley and Societe Generale are the lead financial advisers on the deal, out of 17 banks in total — an unusually large total.

The fee pot is expected to be below standard listings as no fresh cash is being raised as part of the spin-off.

Universal said in its prospectus that the overall expenses to be paid in relation to the Universal deal would not go beyond 0.5% of the total amount of the share distribution.

The listing is the latest win for Euronext in Amsterdam, which has grown as a financial centre in the wake of Britain’s departure from the European Union. Before Universal, Amsterdam had attracted a record 14 IPOs so far this year, of which 10 were SPACs.

But the only Amsterdam listing of a size comparable to Universal in recent history was the 95 billion euro listing of technology investor Prosus, also a spin-off, in September 2019.

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($1 = 0.8524 euros)

(Additional reporting by Toby Sterling; Writing by Sarah White; Editing by David Evans and Lisa Shumaker)

Natixis Fined 7.5 Million Euros in Sub-Prime Exposure Case

Natixis denied any wrongdoing. Eric Dezeuze, a lawyer for the bank, said it was assessing a possible appeal with a decision to be taken within 10 days.

Natixis was among the French banks hit the hardest by the financial crisis in 2007, when bonds backed by low quality mortgages – dubbed sub-prime loans – collapsed, causing losses for many lenders as the fallout spread through financial markets.

Natixis was eventually rescued by its parent bank BPCE and was later restructured.

“Natixis did not simply make a mistake in evaluating its exposure, it intentionally misled the market”, the court ruled, saying that the bank’s communication was “unintelligible”.

Judges also ordered compensation for damages to retail investors. The bank’s lawyer Dezeuze told reporters the compensation could amount to around 1 million euros.

“Of course, the ruling is not in line with our expectations”, Dezeuze told reporters.

“We are considering the possibility of an appeal once we have read the judgment in more detail”, he said.

The case centred on a statement published in November 2007 by the bank regarding its subprime exposure. Natixis said it was not misleading as it could not have anticipated how the crisis would later escalate.

French shareholders association Adam filed a complaint in 2009 on behalf of hundreds of retail investors, demanding investigations into Natixis’ financial communications from 2006, when the bank was listed, until 2009.

The French financial watchdog AMF also looked into whether Natixis misled investors during the 2007 sub-prime crisis but decided not to bring any charges against the bank.

($1 = 0.8377 euros)

(Reporting by Matthieu Protard; Editing by Sudip Kar-Gupta, Richard Lough, Edmund Blair and Jane Merriman)