Universal Music Group Explodes on Trading Debut

Universal Music Group approached a $53 billion valuation following its IPO.

The company surged more than a third in the first minutes of its trading debut on Tuesday following an initial public offering.

Universal Music, which is behind platinum-selling artists including Lady Gaga and Taylor Swift finished higher at around 25 euros ($29.32) per share on Tuesday.
It gives UMG, which listed on the Euronext Amsterdam stock exchange, a valuation of over 46 billion euros.

60% of UMG’s shares will go to Vivendi shareholders and controlling shareholder Vincent Bollore receives a stake worth around 5.9 billion euros.

UMG accounts for around three-quarters of Vivendi’s profits and in the future, it will only own a 10% stake in UMG after the listing. A further 20% is owned by Chinese giant Tencent, with 10% owned by billionaire William Ackman’s hedge fund Pershing Square.

Universal’s shares were trading at 24.97 euros by mid-session trading.

At that price, the biggest of the “big three” record labels – trades at a 25% premium to its only listed competitor, Warner Music (WMG.O), said analyst Matti Littunen of Bernstein.

“No sign of a European discount here,” Littunen said in a note. According to Littunen, the stock’s performance would reduce pressure to seek a dual U.S. listing for Universal, which is based in Hilversum, Netherlands, but has headquarters in Santa Monica, California.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.