Tencent Holdings Limited announced on Friday that a Tencent-led consortium has exercised a call option to increase its stake in Universal Music Group (UMG). The deal is valued at €30 billion ($37 billion) and will see the consortium’s ownership stake rise to 20%.
Tencent (TCEHY) and other consortium members, including Tencent Music Entertainment (TME) first invested in UMG in March 2020. UMG’s parent company, Vivendi (VIVHY), believes that the consortium will enable UMG to further develop its interests in Asia.
UMG is the music company behind singers including Taylor Swift and Lady Gaga and is also home to the Beatles. Vivendi has confirmed that a public listing of UMG is planned for 2022, at the latest.
The combined efforts of Tencent, TME and Vivendi will deepen cooperation with UMG to promote opportunities for artists and music fans alike and will further expand the music entertainment industry, as stated by Tencent. (See TCEHY stock analysis on TipRanks)
Barclays analyst Gregory Zhao reiterated his Buy rating on the stock last month and raised his price target from $81 to $89. This implies upside potential of around 18%. Zhao stated that Tencent’s Gaming segment remains the “brightest spot” after reporting another solid financial quarter.
Overall, consensus among analysts is a Strong Buy based on 5 Buys and 1 Hold. The average price target of $89 suggests an upside potential of around 18%.
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