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Tencent taps, MODIFIED, and sovereign funds to the rescue of the Universal Music deal: sources

LONDON/HONG KONG/PARIS (Reuters) – Tencent Holdings Ltd, located in Singapore, the investor, GIC and other sovereign funds to help rescue a deal to buy a stake in Vivendi ‘ s Universal Music, after a large buy-out funds to halt the negotiations, the sources said.

FILE PHOTO: A Tencent subscribe to the World of Internet Conference held in Wuzhen, Zhejiang province, China, on the 20th October 2019 at the latest. (REUTERS photo/Aly Song, File/Photo

Date (s), which is controlled by billionaire Vincent Bollore, was initially revealed in talks with Tencent, in August, to sell, a division of Universal Music Group (UMG), the music label, from artists such as Lady Gaga, the Beatles, Taylor Swift, Drake, and Kendrick Lamar.

Bollore is looking to cash in on the growing demand from the public for subscription and ad-based music streaming services that are powered UMG, of the profit for the last four years.

The deal would create one of the largest investments by a Chinese company of a major European media, in business, in a time in which Chinese companies have slowed down deal-making in the West.

However, for the past six months, Tencent has a lot of trouble finding the funds to complete the transaction, that is, the concern is that the negotiations with Vivendi and could fall out, the sources said, requesting anonymity as the talks are confidential.

US private equity firms KKR and Hellman & Friedman walked away from the negotiations last month, the sources said, with the force of Singapore’s GIC to a series of sovereign wealth funds to bail out the transaction.

According to the latest plans still under negotiation with the date (s) of the Chinese tech group would be between 20% and 30% stake in the music label, by a group of state investors who would have to stump up the cash, two of the sources said.

The talks between Tencent and sovereign wealth investors to have gained traction over the past few weeks, and the parties have to work just before the closing of the deal by the end of the year, the sources said.

However, the signature can still slip the very beginning of January, the sources said, if the bidding consortium is made up of several different sovereign investors, which is necessary to gain the ultimate blessing of the various governments of the world.

Date (s), Tencent, and GIC declined to comment.

If successful, the tie-up would build on a partnership struck two years ago, under which Tencent can be licensed to Universal music for distribution through a streaming platform.

The long-awaited deal could also boost the morale of the Chinese deal-makers have to be one of the worst years on record for China’s outbound M&A activity is plunging to a 10-year low in the middle of the trade tensions between the United States and China, Refinitiv data show.

ON-GOING SEARCH FOR

Date (s), in the first instance, is revealed in her conversation with Tencent, on Aug. 6, which said that it would sell a 10% stake in UMG, in a deal that valued the music business for about 30 billion euros ($33.07 billion).

As part of the deal, Tencent was an option to increase its stake up to a maximum of 20%.

But in August, the Chinese group has scrambled to team up with international investors, who can tell us more about the finance charges, the sources said.

“It was a constant search,” said one of the sources said. “The majority of investors were unfamiliar with the 30 billion valuation is requested by the date (s).”

Tencent, led by the Chinese, tycoon, Pony, Mon, pinned his hopes on the AMERICAN buy-out funds, KKR and Hellman & Friedman, but the funds wanted to have a bigger share of approximately 30%, and improved governance control of the music label, Vivendi was reluctant to admit it, the sources said.

KKR declined to comment while Hellman & Friedman were not immediately available for comment.

Tencent ‘ s music unit, though it also has the exclusive right to sub-license, to Universal content providers in China.

However, the operation of a direct interest in the the music of the label you want to give more ammunition to compete with the China’s privately-owned ByteDance, one of which is the popular social media platforms, sharing of videos, music and photos on the sites, Toutiao, and TikTok.

Reporting By Pamela Barbaglia in London, Kane Wu in Hong Kong, and Gwenaelle Barzic in Paris, france. Editing by Jane Merriman

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