Universal Music set for takeover by Bill Ackman’s Pershing Square

Bill Ackman plans to buy Pershing Square, he said Tuesday Universal Music Group in a cash and stock deal.

Under the terms of the deal, which is expected to be completed by the end of the year, UMG will form a newly combined company with Pershing Square and be listed on the New York Stock Exchange.

Shareholders will receive a total of 9.4 billion euros ($10.85 billion) in cash and 0.77 new shares for each share UMG owns.

“Since UMG’s listing, Sir Lucian Grainge and company management have done an excellent job nurturing and building a world-class artist roster and generating strong business performance,” Pershing Square CEO Bill Ackman said in a statement Tuesday.

“But UMG’s stock price has been weakened by a number of issues unrelated to the performance of its music business, and more importantly, all of that can be resolved by this transaction.”

He highlighted several factors behind UMG’s underperformance, including uncertainty over Bollore Group’s 18% stake in the company, the delay of a US listing and “inadequate” shareholder communication and engagement.

The company behind platinum-selling artists including Lady Gaga and Taylor Swift was listed on the Euronext Amsterdam stock exchange in 2021 with an initial valuation of 46 billion euros.

UMG was spun off from French media group Vivendi, leaving controlling shareholder Vincent Bollore with a stake worth around 5.9 billion euros.

Billionaire Ackman defended UMG, the world’s largest music company, shifting its primary listing to the United States, arguing that its shares were trading at a deep discount to their intrinsic value with limited liquidity.

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