Tencent is negotiating to buy a 10% stake in Universal Music Group for $3.4 billion, Universal’s parent Vivendi said. The French conglomerate said it is also discussing “areas of strategic commercial cooperation” with Tencent.
The Chinese tech giant controls WeChat, the ubiquitous Chinese messaging app, as well as Tencent Music, which owns major music apps in China such as QQ Music, Kugou and Kuwo. If a deal gets done, Tencent would have an option for a year to buy another 10% on the same terms, Vivendi said.
An investment would be the latest step by Tencent to widen its interest in entertainment. While its U.S. interests are mostly focused around videogaming—it owns Riot Games, an interest in Supercell and in gaming chat app Discord, among other firms—it has also invested in Snap. Given its music apps, however, the Universal Music stake makes a lot of sense.