Universal Music receives takeover offer from Bill Ackman’s Pershing Square | Music industry
Billionaire Bill Ackman’s hedge fund has offered to buy Universal Music Group (UMG) in a deal that values the world’s biggest music company at more than €50bn (£44bn).
New York-based hedge fund Pershing Square has offered to buy the business, which has hosted artists including Taylor Swift and Elton John, in a cash and stock deal.
Ackman said in a statement that the company, run by British-born Sir Lucian Grainge, had “done an excellent job of nurturing and continuing to build a world-class roster of artists and generating a strong business performance” but that its share price had been held back by issues “unrelated to the performance of the music business”.
Shares of UMG, which have been traded in Amsterdam since 2021, have lost more than a quarter of their value in the past year alone.
The company is one of the “big three” record labels, along with Sony Music Entertainment and Warner Music Group. Its roster ranges from classical music to stars like Adele, Drake and Ariana Grande.
Ackman attributed the weak stock price performance in part to the delay in UMG’s U.S. listing, the underutilization of its balance sheet and uncertainty over French conglomerate Bolloré Group’s 18% stake in the company.
He also cited a “lack of investor credit” in his assessment of the company’s €2.7 billion stake in music streaming service Spotify.
Pershing Square, which Ackman founded in 2004, has assets of more than $26 billion. The fund acquired 10% shares of UMG in 2021.
While Ackman said Grainge and his management team have done an “excellent job” at the company, as part of the proposed deal the hedge fund will add veteran talent agent Michael Ovitz as well as two representatives from Pershing Square to the company’s board as chairmen.
The deal would also be subject to “a new employment contract and compensation arrangement for Sir Lucian Grainge,” Ackman said in a letter to the UMG board.
Grainge was paid a package of more than €41 million last year. This included a base salary of 4.4 million euros and bonuses of over 30 million euros.
Under the proposed deal, UMG would merge with a blank check company founded by Pershing Square and then be listed on the New York Stock Exchange. Shareholders will receive a total of €9.4 billion in cash and 0.77 shares in the new company for each Universal share they own. That would represent a 78% premium compared to the company’s closing share price on Thursday, Pershing said.
UMG has been approached for comment.
