Universal Music Group is finalizing its acquisition of Thailand’s second-largest recorded music catalog for $70 million

Universal Music Group has acquired the remaining 30% of RS Group’s Thai catalog for approximately $18 million. UMG plans strategic acquisitions in fast-growing markets such as China, India, Thailand and Indonesia.

Key points

• Universal Music Group (UMG) has acquired the wholly-owned RS Group catalog for approximately $65-70 million, completing a strategic M&A that followed the purchase of a 70% stake last year. For future acquisitions, UMG plans to focus on high-potential markets such as China, India and Indonesia.
• At UMG Capital Markets Day, CEO Sir Lucian Grainge outlined a triple strategy including local A&R, entrepreneurial support through Virgin Music Group and targeting mergers and acquisitions in smaller but promising markets rich in local talent.
• UMG expects to use significant free cash flow – up to $1.66 billion annually – from adjusted EBITDA for acquisitions and post-dividend liabilities. The company intends to leverage the estimated 220 million potential streaming subscribers in these markets, strengthening its growth trajectory.

Summary of UMG’s strategic plan for high potential markets

MBW Reacts, Music Business Worldwide’s analytical commentary series, covers Universal Music Group’s (UMG) recent acquisition maneuvers, most notably its acquisition of RS Group’s recorded music catalog in Thailand, with total expenses ranging from $65 to $70 million. This purchase, initially covering 70% of the shares and then the remaining 30%, signifies UMG’s commitment to significant development in emerging music markets.

At UMG’s recent Capital Markets Day, executives highlighted a proactive acquisition strategy targeting “high potential” markets, particularly in Asia, Africa and Latin America. These regions, including China, India, Nigeria and several Southeast Asian countries, are expected to see a surge in streaming revenues. UMG CEO Sir Lucian Grainge outlined a three-pronged approach including local artist and repertoire development (A&R), support for regional entrepreneurs through Virgin Music Group and strategic mergers and acquisitions (M&A).

Grainge emphasized that while transformational acquisitions in established markets may be rare, there are numerous opportunities lurking in smaller, emerging ventures in these fast-growing regions. Boyd Muir, vice president/chief financial officer of UMG, supported this claim by detailing plans to convert approximately 60-70% of UMG’s adjusted EBITDA to free cash flow, which will help fund future acquisitions while maintaining a dividend commitment of 50% of adjusted net earnings . UMG’s strategic investments are expected to have a significant impact, given that research indicates that there are 220 million potential streaming subscribers, primarily in identified high-potential markets.

The company’s strong financial health, including adjusted EBITDA of approximately $2.56 billion, puts UMG well-positioned to capitalize on growth opportunities in the global music market in the coming decades. Ultimately, Grainge and Muir’s comments reflect confidence in the sustainable integration of emerging markets into UMG’s broader operating ecosystem, paving the way for the company’s significant expansion.

Source : Universal Music Group just completed its $70 million acquisition of Thailand’s second-largest recorded music catalog… while suggesting that many more M&A deals in “high potential” markets are on the way.