Ackman Makes $64 Billion Bid for Universal Music Group

Universal Music Group Expected to List on NY Exchange

Pershing Square, a private investment firm led by billionaire Bill Ackman, has proposed a takeover of Universal Music Group in a $64 billion deal. The offer values the music label giant at approximately 30.40 euros ($35) per share, representing an 78% premium over its last closing price.

The proposal comes as Universal Music is expected to move its listing from Amsterdam to New York, which could lead to increased investor participation and potentially boost earnings and valuation. Ackman’s firm has been a significant shareholder of the company since 2021, when it acquired a 10% stake ahead of UMG’s initial public offering.

Ackman’s letter to Universal Music Group’s board highlights concerns over the company’s “underutilized balance sheet” and its handling of its investment in Spotify Technology. The music industry has faced challenges due to the rise of AI and streaming services, which have impacted Universal Music’s share price.

The proposed deal requires the support of UMG’s top shareholders, including Bollore Group, Vivendi, and China’s Tencent. Ackman has expressed his intention to maintain Lucian Grainge as CEO post-transaction. The acquisition vehicle values Universal Music at approximately 55.75 billion euros ($64.31 billion).

Shares of Universal Music Group rose 13% on Tuesday, while those of Bollore Group climbed 5%. Vivendi’s shares increased more than 10%. Pershing Square currently holds a 4.7% stake in the company, making it its fourth-largest shareholder.

Universal Music Group has faced declining share prices since its initial public offering, despite growing global music revenues. Major labels are struggling to stay competitive as streaming services from Spotify, Amazon, Apple, and Deezer gain market share.

Source: Al Jazeera