French media group Vivendi has secured shareholder support for its proposed spin-off from crown jewel Universal Music Group.
At a shareholders’ meeting Tuesday, investors overwhelmingly supported the proposal – which would mean the world’s largest music label would complete its listing on Euronext Amsterdam by the end of September.
The proposal concerns the distribution of 60% of UMG’s share capital to shareholders through the Amsterdam stock exchange listing.
The pivotal vote came after billionaire Bill Ackman’s SPAC Pershing Square Tontine Holdings signed a deal to buy 10% of UMG for about $4 billion. The deal, announced this weekend, gave UMG an enterprise value of EUR 35 billion ($41.55 billion) for 100% of its share capital.
A consortium led by Chinese titan Tencent Holdings already owns a 20% stake in the group. UMG accounts for about three quarters of Vivendi’s profits.
While the spin-off has gained investor support, it has been criticized by activist hedge funds Artisan Partners and Bluebell, who claim it disproportionately benefits larger shareholders, including Vincent Bollore, over smaller investors. The French billionaire has 30% of the voting rights in UMG.
Nearly three-quarters of shareholders also voted in favor of Vivendi’s plan to buy back and cancel up to 50% of its shares.
Matti Littunen, European media analyst at Bernstein, noted that some investors had reservations about the tax implications for smaller shareholders of the UMG spin-off, along with questions about why Vivendi isn’t alienating a larger portion of the company, but for it. chooses to sell small portions. to entities such as Ackman’s SPAC.
“Why sell some of it for cash and not return 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, there is still a lot of suspicion about the capital allocation for Vivendi after this deal, so as mentioned, many controversial aspects to this distribution.”