Google and Vevo Deal: Everybody knows Google Inc (NASDAQ:GOOG) as the number one search engine in the world (among other things). Everybody also knows Vevo as a popular music video service.
The question is: are these two companies soon going to form some sort of deeper relationship?
If you believe a recent report by Businessweek the answer is yes.
Apparently, YouTube, owned by Google Inc (NASDAQ:GOOG), is negotiating a “$50 million equity investment in music video service Vevo LLC.”
While this may sound like a lot of money, it is important to note that investing this much in Vevo would only grab the search engine giant less than 10 percent equity in the company.
What does this mean? In short, they are giving Vevo a valuation of approximately $500 million.
While there is a lot of speculation as to why Google Inc (NASDAQ:GOOG) would make this investment, the same article published on Businessweek offers the following explanation:
“The investment would be part of a broader contract to keep Vevo’s music videos on YouTube, the people said. Vevo, formed in 2009 by Vivendi SA’s Universal Music and Sony Corp.’s Sony Music Entertainment, and Google last year extended their existing contract until April.”
Although a lot of signs point to this being true, there is no official confirmation from Google as of yet. Businessweek reached out to Chris Dale, spokesman for Google and received the following email in response:
“While we don’t comment on individual negotiations, we always hope to renew our relationships with valuable partners so we can continue to provide YouTube users with the best possible music experience.”
Right now, it appears that Google Inc (NASDAQ:GOOG) is going to invest quite a bit of money in Vevo to ensure that the two companies continue to work together well into the future.
What are your thoughts on this possible investment? Do you think Google Inc (NASDAQ:GOOG) is making a good move?
Check back here for more updates on Google and Vevo Deal.
DISCLOSURE: I have no positions in any stock mentioned.
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