Pershing Square head Bill Ackman
Sorry, how much? Billionaire hedge-funder Bill Ackman and his Pershing Square have now proposed a $64 billion+ deal to acquire Universal Music Group (UMG), a takeover that would include a shift to the New York Stock Exchange.
The offer, which values the world’s largest music label at €30.4 ($35.06) per share, represents a substantial 78% premium over UMG’s last closing price in Amsterdam. Pershing Square currently holds a scaled-down 5% stake in the company, though Ackman is now eyeing a far bigger piece of this pie.
If consummated, the takeover would easily rank among the largest deals in the history of the music business. But like any ultra-ambitious New York hedge-funder, Ackman feels there’s a much bigger upside ahead.
As part of the deal, UMG would shift to the New York Stock Exchange, something Ackman and Pershing have been pushing on for years. Ackman says UMG’s “languishing” share price is rooted in technical listing issues rather than the performance of the music business and Universal Music itself.
But would the NYSE give UMG the boom Ackman is looking for? UMG’s Euronext performance has been mostly tempered, despite searing investor and Wall Street interest in music IP and surrounding businesses.
Already splashing water on that idea is Matt Pincus, a longtime music industry investor who leans more towards slow-cooking than quick flip. “He’s saying: this is a 75 percent premium to the value of Universal’s stock,” Pincus told the Financial Times this morning.
“But I’m only giving shareholders $5 billion in cash, and the rest of it I’m giving them in a publicly listed blank check company, with the idea that simply moving it to a US listing creates the uplift.
“It’s basically ‘add water, and you get a higher valuation’. But where is the real value creation?”
The proposed transaction would merge UMG with Ackman’s acquisition vehicle, SPARC Holdings, creating a new entity incorporated in Nevada.
Under the terms of the deal, Michael Ovitz, the former president of Walt Disney and a long-renowned Hollywood agent, would join the board as chairman. Alongside Ovitz, two Pershing representatives would also assume board seats.
As mentioned, the move is designed to boost UMG’s liquidity and valuation by tapping into a deeper pool of American investors, especially after UMG recently delayed its own plans for a secondary New York listing.
Ackman is now faced with the tall task of winning over UMG’s dominant shareholders, including the French billionaire Vincent Bolloré and China’s Tencent.
Both could be difficult to sway given their broader visions for UMG that go far beyond quick cashouts. But perhaps closing the deal isn’t the point?
“The offer is non-binding and might well fail, but we think at a minimum it has the merit of raising valid questions and making the case for dramatic changes,” ING analysts opined to Reuters this morning.
Back to the critical shareholders in discussion: The Bolloré Group currently commands a significant majority of Universal’s voting rights and has not yet commented on the proposal; Tencent has recently been ratcheting up its holdings and harbors serious strategic ambitions with UMG.
If approved by two-thirds of attending shareholders and regulatory bodies, the deal is expected to close by the end of 2026, marking one of the most significant music industry deals — in history.
