Billionaire hedge fund manager Bill Ackman has proposed acquiring Universal Music Group, according to multiple reports. The plan values UMG at €56 billion, or €30.40 per share, which represents a 78% premium to UMG's closing price the previous Thursday. UMG shares rose sharply in Amsterdam trading on Tuesday, climbing as much as 24% intraday.
Under the offer, participating shareholders would receive €5.05 per share in cash, totaling €9.4 billion, and 0.77 shares in the new combined entity, multiple reports indicate. The proposal involves combining UMG with Pershing Square SPARC Holdings, an acquisition entity linked to Ackman's firm Pershing Square Capital Management, according to major media. The transaction would secure a primary listing on the New York Stock Exchange, and the deal would cancel roughly 17% of UMG's shares, major media reports.
UMG's stock price has languished due to a combination of issues that are unrelated to the performance of its music business and importantly, all of them can be addressed with this transaction.
Funding for the cash portion would come from €2.5 billion from Pershing Square, €5.4 billion in new debt by the merged group, and the sale of UMG's holding in Spotify, expected to raise about €1.5 billion after taxes and artist payments, according to major media. Ackman's plan anticipates unlocking €15 billion over five years through more efficient use of the balance sheet to support investments, acquisitions, and share buybacks, major media reports.
Bill Ackman stepped down from UMG's board last year, according to major media. According to Ackman, UMG's stock price has languished due to issues unrelated to the performance of its music business, which can be addressed with this transaction. He described UMG's management as having done an excellent job nurturing and continuing to build a world-class artist roster and generating strong business performance.
UMG's management has done an excellent job nurturing and continuing to build a world-class artist roster and generating strong business performance.
Key shareholders include French-owned Vivendi SE holding about 10% of UMG, Chinese multinational Tencent Holdings with around 11%, and Bolloré SE as the biggest shareholder with more than 18%, according to major media. Pershing Square already owns a stake in UMG and has holdings in Google, Meta, Amazon, and Restaurant Brands International, major media reports. It remains unknown how major shareholders like Bolloré SE, Vivendi SE, and Tencent Holdings will respond to the offer.
Neither UMG nor any major shareholders have commented on the proposal, according to major media. It is unclear whether UMG's board will accept or reject the proposal, and potential regulatory hurdles or antitrust concerns for the merger have not been addressed. The exact timeline for the deal's completion or next steps is also unknown.
But he said its stock price had "languished" due to issues unrelated to the performance of its music business, which could all be "addressed with this transaction".