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Europe Markets

May 18, 2021, 11:57 a.m. EDT

Possible Universal Music sale pushes Vivendi shares higher, as European stocks remain in record territory

By Jack Denton

French media giant Vivendi said on Tuesday that it may sell an additional 10% of Universal Music — the label behind acts including Lady Gaga, Justin Bieber, Taylor Swift, and Kendrick Lamar — ahead of floating the group by the end of September 2021.

Vivendi (PAR:FR:VIV) stock climbed near 2% higher in Paris, after the company said it was “analyzing the opportunity of selling 10% of [Universal Music Group] shares to an American investor or initiating a public offering of at least 5% and up to 10% of UMG shares.”

A consortium including Chinese technology giant Tencent (HKG:HK:700) already owns 20% of Universal Music after the sale of two 10% stakes, while Vivendi retains 80% ownership. The French group confirmed plans last week to list Universal Music in Amsterdam this fall, in a move that would distribute 60% of its share capital to current investors.

As the music industry enjoys strong revenue growth from streaming services, Vivendi is set to profit from a listing, and it values Universal Music at €33 billion ($40 billion).

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In wider trading, the pan-European Stoxx 600 (STOXX:XX:SXXP) rose 0.2%, nearing the record high hit last week. In London, the FTSE 100 (FTSE:UK:UKX) climbed 0.2%, while Paris’ CAC 40 (PAR:FR:PX1) fell 0.2% and the Frankfurt DAX (XEX:DX:DAX) slipped just below flat.

U.S. stocks were mixed, with the tech-heavy Nasdaq (NASDAQ:COMP) ahead while Dow industrials (DOW:DJIA) were down around 70 points by midday, after declining 54 points on Monday to close at 34,327.

Stocks continue to rebound from declines last week driven by U.S. inflation fears, with analysts pointing to a return by investors to tech stocks, which were particularly battered in the selloff.

“The markets continue to find support from optimism surrounding the reopening of major economies and ongoing backing from major central banks,” said Victor Argonov, an analyst at fintech investment group Exante. “Investors still appear keen to buy every dip in stocks and sell the dollar in favor of risk-sensitive commodity dollars and British pound.”

“Investor sentiment remains cautiously optimistic, with concerns about sky-high valuations for many U.S. technology stocks and runaway inflation subsiding a little,” Argonov added.

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Shares in Vodafone (LON:UK:VOD) sunk 6.5%, after the telecommunications giant missed analyst expectations for full-year earnings, despite returning to profit to the tune of €536 million in the 12 months to the end of March, following a €455 million loss in the year prior.

Imperial Brands (LON:UK:IMB) stock rose 1.5%, after the tobacco group reported a solid first half of its fiscal year and said it was on track to deliver its full-year targets. Revenue rose 6% to £15.5 billion in the six months to the end of March, driven by strong growth in next-generation products like vaping — which have previously faced headwinds.

Shares in Stellantis (PAR:FR:STLA) , the world’s fourth-largest car maker, formed out of the merger between Fiat Chrysler and PSA Group earlier this year, rose 1.5% before ending the day near flat. The group and Foxconn — the assembler of Apple’s (NAS:AAPL) iPhone — announced a new partnership to develop in-car technology.

Trading in Siemens Gamesa (MCE:ES:SGRE) stock was halted by Spanish regulators until the afternoon, after local newspaper Expansión reported that Siemens Energy — which owns a 67% stake in the wind turbine manufacturer — has hired investment banks to increase its ownership. Shares in Siemens Energy (ETR:XE:ENR) , the energy tech spinoff of German industrial giant Siemens, rose 2%. Siemens Gamesa stock jumped 4.5% when trading resumed.

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