Universal Music Group‘s valuation just keeps on mushrooming.
The company’s worth was being pegged at €29bn ($33bn) by Deutsche Bank in early January, before Morgan Stanley upped the stakes. In mid-January, the latter bank suggested that Universal was worth $29bn at a “base valuation” – but that in a “bull case”, it could be worth anywhere up to $42bn.
Now, that high-water mark has been hoisted skyward yet again. This time, it’s JPMorgan, which has just stuck a gigantic €44bn ($50bn) ‘fair value’ price-tag on UMG.
In a new report from JPMorgan Cazenove, media analyst Daniel Kerven describes UMG as “a unique asset” which owns and controls “undermonetized, must-have, global content that is strategic to the tech giants and can’t be replicated”.
The $50bn valuation is worth no less than 48.8 times Universal’s latest annual EBITA (earnings before interest, taxes, and amortization).
As revealed last week, UMG recorded a €902m ($1.07bn) EBITA in 2018, with total yearly revenues – across records, publishing, merch and more – weighing in at €6.023bn ($7.15bn).
Vivendi is busy working on the prospective sale of up to 50% of UMG to a buyer (or buyers). Due diligence on investment bank partners has begun, with a floor price to be set soon.
“[Universal owns] undermonetized, must-have, global content that is strategic to the tech giants and can’t be replicated.”
Daniel Kerven, JPMorgan
According to a Reuters report today (February 18), Vivendi is looking to choose “a half-dozen firms” to handle the matchmaking of UMG with a buyer.
JP Morgan, with its $50bn valuation, would ordinarily be an obvious standout amongst the candidates, but things are getting complicated; JPM played a role in a fallout between Vivendi and an activist investor, Elliott Advisors, over Telecom Italia last year.
In April 2018, JPM reportedly helped Elliott acquire a 8.8% stake in Telecom Italia, which supposedly left Vivendi “fuming”. Universal’s French owner is now, says Reuters, in a “battle with Elliott over strategy, management and the board of the Italian group, in which it owns 24%”.
Sir Lucian Grainge, Chairman and CEO of UMG (pictured), may be hoping that all is temporarily forgiven, if it means a $50bn valuation is touted around the global M&A marketplace.
Potential buyers of Universal Music Group mooted by some quarters have included Apple, Liberty Media, Tencent, Alibaba, Verizon and Google.Music Business Worldwide
