The world’s largest music group Universal Music started with a sharp jump on the stock exchange. The share jumped on its debut on the Euronext stock exchange by more than 36 percent above the issue price. With a price of around 25 euros, Universal Music was worth more than 45 billion euros. It is the largest European IPO this year.
The Universal Music Group (UMG) has a wide range of artists under contract with stars such as Taylor Swift, Lady Gaga, Billie Eilish, Justin Bieber and the Rolling Stones. In the crisis years of the music industry, Universal Music also benefited from the end of its British competitor EMI and expanded its catalog to include the Beatles, among others.
In the first half of this year, Universal Music increased sales by around eleven percent to a good 3.8 billion euros. The bottom line was a profit of 452 million euros.
Just a few years ago, the music industry was in a downward spiral that at times seemed hopeless. As songs spread over the Internet, CD sales plummeted. The sale of downloads, including via Apple’s iTunes platform, supported the business, but did not turn things around.
It was only the success of streaming subscriptions, with tens of millions of songs available over the Internet at any time, that brought the industry back on a growth path. In 2020, the global music market grew for the sixth year in a row, by 7.4 percent to $ 21.6 billion, according to figures from the industry association IFPI. As the world’s number one with many top artists, Universal Music benefits greatly from the trend.
Vivendi shareholders benefit
The Universal Music Group previously belonged to the French media giant Vivendi. However, major investors have been calling for a spin-off for years. They bet that the two companies will be worth more separately. The calculation worked out for the stock market debut: Although the Vivendi price fell, there was a clear plus for the shareholders if you add the price of the UMG share. 60 percent of the shares in Universal Music went to Vivendi shareholders, 30 percent are held by investors and Vivendi will keep 10 percent.
“The successful IPO is a great compliment for our company and a milestone in our company history,” said UMG European boss Frank Briegmann. The company has shown that the musical content is valuable and stable in value.