Billionaire investor Bill Ackman’s Pershing Square firm launched a $64.31 billion takeover bid for Universal Music Group (UMG) on Tuesday. The proposal, structured as a cash-and-shares offer, values the music giant at approximately 30.40 euros ($35) per share.
This offer represents a 78 percent premium over UMG’s most recent closing price of 17.10 euros. The move marks a significant pivot in Ackman’s five-year pursuit of the company, which houses global superstars like Taylor Swift, Billie Eilish, and Kendrick Lamar.
A push for New York
Central to Ackman's proposal is a plan to relocate UMG’s stock listing from Amsterdam to the New York Stock Exchange. Ackman argues that a U.S. listing would attract a broader base of investors, including index funds, which could lead to more robust earnings and a higher corporate valuation.
Shares of UMG surged 13 percent following the announcement. Meanwhile, the Bollore Group and Vivendi, UMG’s primary shareholders, saw their shares climb 5 percent and 10 percent respectively.
Despite the aggressive bid, Ackman has maintained a relatively friendly posture toward current management. He stated that UMG chairman and CEO Lucian Grainge should remain in his leadership role. According to Ackman, the two met for dinner recently to discuss the merger, and Grainge encouraged the formal submission of the bid.
Ackman’s letter to the UMG board highlights a desire for governance changes, including the appointment of former Hollywood super-agent Michael Ovitz as board chair. Pershing Square also intends to secure two seats on the board for its own representatives.
However, the path to acquisition remains complex. Ackman must secure the support of key stakeholders, including the Bollore family, who control 80 percent of the voting rights. China’s Tencent also holds a significant stake in the company.
Investors have expressed frustration with UMG’s performance since its 2021 IPO, noting that the share price has dropped by nearly a third since the company went public. Analysts at Wells Fargo point to decelerating streaming growth and the threat of AI disruption as primary factors behind the company’s sluggish market performance.
Ackman has previously criticized UMG for an "underutilized balance sheet" and its management of a 2.7 billion euro investment in Spotify. Pershing Square, which currently holds a 4.7 percent stake in UMG, previously attempted to acquire the company through a shell corporation in 2021. That effort was shelved due to regulatory scrutiny, leading Pershing Square to become a direct investor instead.
