Vivendi considers selling half its UMG music 'jewel'

By Mathieu Rosemain

PARIS (Reuters) - Vivendi is considering selling up to half of its UMG music division to one or several strategic partners, ending months of speculation about a potential stock market listing of the unit, whose value soared on booming streaming revenues.

The move contrasts with previous announcements by the French media conglomerate, which until now had floated the idea of selling a minority stake in Universal Music Group (UMG), the world's biggest music label -- deemed a "jewel" by Vivendi's executives.

It also illustrates the ability of Vivendi's controlling shareholder, billionaire Vincent Bollore, to swiftly shift gears depending on market conditions, as the group's recent spree of acquisitions has produced mixed results.

Vivendi, reporting a 32 percent jump in first-half core operating profit, also announced it had entered in exclusive talks with Spanish group Grupo Planeta to acquire French publishing group Editis for an enterprise value of 900 million euros ($1.05 billion).

Pressure had been mounting on Vivendi in the last few months to update investors on its plans for UMG -- worth between 20 billion and 30 billion euros ($23 billion-$35 billion), according to analysts.

UMG artists include Kendrick Lamar, Taylor Swift, Drake, Lady Gaga, The Beatles and The Rolling Stones.

The recent listing of streaming platform Spotify and the signing of several major license deals, including with tech giant Facebook, have given a lift to the division's value and that of its parent company.

“We started a process working on the different assumptions. We did receive the agreement to go up to 50 (percent) because it gives a range of possibilities just to welcome maybe more than one potential partner," said Vivendi's Chief Executive Arnaud de Puyfontaine on a call with analysts.

Vivendi gave no clues as to potential buyers of the UMG stake, but said that it would soon be engaging banks to help identify strategic partners.

The transaction is likely to be launched this autumn and could be completed in the next 18 months, Vivendi said in a statement.

The group ruled out the option of listing the music division, citing the "complexity" of the process. Proceeds of the sale may be used to buy back shares and reduce the group's share capital, it said.

LOADED WITH CASH

A deal to acquire Editis would help the media giant, loaded with fresh cash thanks to the recent sale of stakes in video-games group Ubisoft and electronics retailer Fnac Darty, to further diversify its activities, which range from telecoms to advertising with Havas.

Mediobanca is acting as financial adviser to Vivendi on the Editis deal.

The potential acquisition of Editis and the 5.2 billion euros Vivendi has spent to buy stakes in Telecom Italia and Mediaset are all part of a plan to transform the group into an integrated European media powerhouse, de Puyfontaine said during the call, reiterating past commitments made by Bollore.

Vivendi's investments in Italy currently reflect paper losses of over 1 billion euros and the group had to take a 512 million-euro writedown on the value of its stake in Telecom Italia in the first half.

Some analysts questioned the relevance of a return to publishing, as Vivendi exited the industry in the early 2000s, with the notable sale of Editis.

"Editis is not related to what was the structure of the group once upon a time," de Puyfontaine said.

Separately, Vivendi reported that first-half core operating profits had jumped by 32 percent, based on constant currencies and like-for-like businesses, to 542 million euros ($635 million), beating the average estimate in a Reuters poll of 513 million.

Revenues over the period were up by 4 percent from a year ago to 6.46 billion euros.

(Reporting by Mathieu Rosemain; Editing by Sudip Kar-Gupta and Adrian Croft)