December 2, 2023

Taylor Swift performs on stage during the Taylor Swift Reputation Stadium Tour at Mercedes-Benz Stadium on August 11, 2018 in Atlanta, Georgia.

John Shearer – TAS18 – Getty Images for TAS

The French media group Vivendi is waiting for a close vote from investors about its planned spin-off of the legendary Universal Music Group.

If approved, the world’s largest music label – home to stars like Lady Gaga and Taylor Swift – will complete its listing on Euronext Amsterdam in late September, Vivendi said.

The shareholders are expected to vote on the proposal on Tuesday.

It comes after billionaire William Ackman’s SPAC Pershing Square Tontine Holdings signed a deal to buy 10% of UMG for around $ 4 billion, the companies announced over the weekend. The deal gave UMG an enterprise value of 35 billion euros (41.55 billion US dollars) for 100% of its share capital.

A consortium led by the Chinese Titans Tencent Holdings already owns 20% of the shares in the group. UMG accounts for around three quarters of Vivendi’s profits.

Vivendi’s shareholders’ meeting began at 9 a.m., London time. Investors will vote on the proposed distribution of 60% of UMG’s share capital to shareholders through the listing in Amsterdam.

Although the spin-off is expected to receive support at the first meeting, criticism has been voiced by activist hedge funds Artisan Partners and Bluebell, which claim that larger shareholders, including Vincent Bollore, are benefiting disproportionately from smaller investors.

The French billionaire Bollore holds 30% of the voting rights in UMG. For the spin-off to take place, 50% must vote in favor.

“Assuming the French regulators do not intervene at any point, as some of the activists have urged them, it seems that Vivendi today should just pass an ordinary resolution by a simple majority,” said Matti Littunen, European media analyst at Bernstein.

Littunen noted, however, that some investors had reservations about the tax implications for smaller shareholders, along with a question why Vivendi wasn’t spinning off a larger portion of the company and instead selling small stakes in companies like Ackmans SPAC.

“Why sell some of it for cash and stop distributing it to shareholders and let them figure out what to do with the proceeds?” he told CNBC’s Street Signs Europe on Tuesday.

“In general, after this deal, there is still a lot of suspicion about the capital allocation for Vivendi, so as mentioned many controversial aspects of this allocation.”

Shareholders will also vote on a plan to buy back and delete up to 50% of Vivendi’s shares, which will require two-thirds of the support.