Investors overwhelmingly backed the proposal – which would see the world’s largest music label complete its listing on Euronext Amsterdam in late September – at a shareholders meeting on Tuesday.
The proposal provides for the distribution of 60% of UMG’s share capital to shareholders via public listing in Amsterdam.
The crucial votes came after billionaire investor William Ackman’s SPAC Pershing Square Tontine Holdings signed a deal to buy 10% of UMG for around $ 4 billion, the companies said over the weekend. The deal gave UMG an enterprise value of 35 billion euros ($ 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 represents around three quarters of Vivendi’s profits.
Although the spin-off has gained investor support, criticism has been leveled by activist hedge funds Artisan Partners and Bluebell, who say it disproportionately benefits large shareholders, including Vincent Bolloré, compared to smaller investors. The French billionaire Bolloré owns 30% of the voting rights of UMG.
Almost three quarters of shareholders also voted in favor of the plan to buy back and cancel Vivendi up to 50% of its shares.
Matti Littunen, European media analyst at Bernstein, noted that some investors had reservations about the tax implications for small shareholders of the UMG split, as well as questions about why Vivendi is not parting with a larger share of the business, choosing instead to sell small portions to entities such as Ackman’s PSPC.
“Why sell some of it for cash and not distribute more to shareholders and let them decide what to do with the product?” He told CNBC’s “Street Signs Europe” Tuesday.
“In general, there is still a lot of suspicion about the capital allocation for Vivendi after this transaction, so as mentioned, a lot of controversial aspects of this distribution. “