A consortium led by Chinese internet giant Tencent has agreed to buy 10% of Universal Music Group (UMG) from French firm Vivendi, valuing the music label at 30 billion euros (about US$33.7 billion).

Photo credit: Tencent

The Tencent-led group, which includes Tencent Music Entertainment and certain global financial investors, also has the option to extend its acquisition to up to 20% of UMG’s share capital until January 2021 on the same price basis, according to a statement from Vivendi.

The deal is also set to be complemented by a second agreement that would allow Tencent Music Entertainment to acquire a minority share capital of a UMG subsidiary that houses its operations in Greater China.

Prior to the deal, Tencent struck music distribution deals with companies such as Sony Music Entertainment, Warner Music Group, and South Korea’s YG Entertainment, which manages K-pop artists such as Blackpink and Big Bang.

Vivendi said it plans to use the investment to further develop its presence in the Asian market. Meanwhile, the deal would give Tencent more access to Western music artists such as U2, Drake, and Taylor Swift.

The transaction is expected to close by the end of the first half of 2020, according to the statement. In addition, Vivendi also said it has started negotiations concerning a potential sale of an additional minority share for a price that would “at least be identical” to its deal with the Tencent-led group.

Less than a month ago, Bloomberg reported that Tencent rival Bytedance began testing a new music app in India and Indonesia called Resso.

While Bytedance has already secured rights from Indian labels T-Series and Times Music, it has yet to land deals with the world’s three largest music companies – Warner Music Group, Universal Music Group, and Sony Music Entertainment – according to the report.