Bill Ackman has made a cash and stock offer for Universal Music Group (UMG), estimating the company’s worth at around $65 billion, which has caused its stock price to rise significantly.
The bid, put forward by Ackman’s hedge fund, Pershing Square Capital Management, values UMG—home to big names like Taylor Swift, Drake, and Lady Gaga—at about $35 per share. This represents a notable 78% premium compared to its stock price prior to the announcement of the takeover.
Ackman’s proposal aims to provide shareholders with roughly $10.85 billion in cash alongside 0.77 new shares for each share owned.
After the news broke, UMG’s stock experienced a rise of about 11%.
Ackman has suggested that UMG’s stock has been underperforming for reasons largely unrelated to its core music business, and he believes the proposed deal could address those issues.
“Since UMG’s listing, Sir Lucien Grainge and the management team have excelled in developing a world-class roster of artists and achieving robust results,” he noted in a statement.
He expressed concern that UMG’s stock price has been negatively impacted by various factors not tied to its music performance, all of which he asserts can be remedied through this deal.
Ackman identified several challenges affecting the stock, such as uncertainties surrounding Vincent Bolloré’s approximate 18% ownership stake, delays in a planned U.S. listing, and a lack of strong communication and support from investors.
The plan would see UMG merge with Pershing Square to create a new entity to be listed on the New York Stock Exchange, with aspirations to finalize the transaction by year-end.
Ackman is also advocating for board changes, suggesting Michael Ovitz take the role of chairman and include two representatives from hedge funds.
A new employment agreement for CEO Lucien Grainge would also be a part of the proposed changes.
UMG, which was spun off from Vivendi SE in 2021, made its debut on Euronext Amsterdam with a valuation near $53.18 billion and remains the largest music label globally.
After news of the offer, shares of Vivendi and Bolloré increased by approximately 11% and 6.3%, respectively.
Ackman has been vocal about wanting UMG’s primary listing shifted to the U.S., claiming the stock is undervalued due to limited liquidity.
Neither UMG nor Bolloré replied to inquiries, and Vivendi opted not to comment.
