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Sony Music Cashed In More Than $260 Million Worth of Spotify Shares in IPO

Sony Music Entertainment sold 17.2% of its shares in Spotify on Tuesday, yielding a gain for the label of $260 million or more, according to a notice Sony shared with investors.

At the time of Spotify’s initial public offering, Sony Music Entertainment owned 5.7% of Spotify’s outstanding shares, or 10.16 million shares.

With the sale, Sony Music retains 8.4 million Spotify shares, or 4.7% of the internet company’s total ordinary shares. With its ownership now less than 5%, Sony would not be obligated to disclose changes in its Spotify holdings under SEC rules.

SME did not disclose the value of the Spotify shares it sold Tuesday. Spotify’s stock opened at $165.90 per share at 12:43 p.m. ET before closing at $149.01. Given that it sold about 1.74 million shares, at the closing price that would have been worth around $260 million.

Sony estimated that the total net gain in value of its Spotify holdings (including the shares it sold Tuesday) to be recorded for the quarter ending April 27, 2018, would be about $1 billion (approximately 105 billion yen). That’s based on the Spotify closing share price on April 3.

However, Sony acknowledged in the notice to shareholders on Wednesday, given that the market value of Spotify’s stock following the IPO “may be volatile,” the value could fluctuate “during the period that SME continues to hold the shares.”

Indeed, Spotify’s stock was down more than 5% Wednesday in midday trading on the New York Stock Exchange, as investor excitement following the IPO cooled off.

It isn’t known whether Warner Music Group and Universal Music Group — which also own stakes in Spotify — have sold any of their shares. Each of the music giants is said to own around 4% of Spotify’s shares, but they aren’t required to disclose stock sales under SEC rules.

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