James Warrington
A supporter of Donald Trump has made an offer of nearly $US64.3bn ($91.2 billion) to buy Universal Music Group (UMG), whose artists include Taylor Swift and Harry Styles.
Bill Ackman’s Pershing Square is seeking to take control of UMG, the world’s largest record label, in a landmark deal that would shift the company’s stock market listing from Amsterdam to New York.
Under a proposal submitted to Universal, shareholders would receive a total of €9.4 billion ($15.6 billion) in cash, or €5.05 per share, alongside shares in a newly formed company called New UMG. New UMG would then be listed on Wall Street.
Pershing Square, which already owns a stake in Universal, said the offer would value the company at €30.40 per share, making it worth around $US64 billion, according to Reuters. Universal is currently trading at just above €17.11 per share.
Ackman’s hedge fund also promised to hand up to €750 million to artists by selling Universal’s 3 per cent stake in Spotify, which is worth around €2.7 billion.
In a letter to Universal’s board, Ackman said Sir Lucian Grainge, the music label’s British chief, had “done an excellent job nurturing and continuing to build a world-class artist roster” but argued that the company’s share price had “languished”.
Shares in Universal have slumped by more than 30 per cent over the past year.
Ackman blamed a combination of factors, including uncertainty surrounding an 18 per cent stake in Universal held by the French industrial dynasty the Bolloré family, the postponement of a US listing and a “lack of investor credit” for the Spotify stake.
Universal’s stock price jumped by around 10 per cent as markets opened following news of the takeover bid.
Kendrick Lamar and Adele are among the other major artists signed to Universal, which is one of the so-called “big three” record labels alongside Sony and Warner Music.
The label was spun out of parent company Vivendi, which is controlled by the French industrialist billionaire Vincent Bolloré, and listed in Amsterdam in 2021 with a market value of €46 billion.
The Bolloré family has significant control over Universal through both a personal stake and Vivendi, which retains a 13 per cent shareholding. Chinese tech giant Tencent is also a major investor.
Pershing Square will require the support of two-thirds of shareholders, meaning its deal hinges on the backing of the Bolloré family, whose commitment to the company has been in question since its representative stood down from the Universal board last summer.
Analysts at Panmure Liberum said the structure of the bid appeared “in part designed to offer an exit for the Bolloré Group”. Ackman, who held a brief phone call with the French investor on Monday, acknowledged that “without Bolloré we don’t have a transaction”.
Ackman, a former donor to the Democrats who switched allegiances to endorse Trump at the last election, has been pushing for the company to move its listing to the US.
In a post on social media in 2024, he argued that Universal was trading “at a large discount to its intrinsic value with limited liquidity”, adding that the situation had reached a “tipping point”.
Universal had been preparing a secondary listing in the US but put those plans on hold last month, with management citing turbulent market conditions.
Ackman, a prominent financier whose fund bought a 10 per cent stake in Universal in 2021, said he would “refresh” the company’s board by adding Michael Ovitz, co-founder of talent agency Creative Artists Agency, and two representatives from Pershing Square.
He also set out plans to focus on acquisitions and draw up a new employment contract and compensation arrangement for Sir Lucian. The British music boss earned €41 million last year, largely thanks to bonus awards.
If successful, the swoop for Universal would make Ackman one of the most prominent players in the music world at a time when the industry is grappling with the impact of AI.
Universal has been a vocal opponent of tech firms using copyrighted material to make AI-generated music and has filed lawsuits against companies including Anthropic, which is behind the Claude chatbot.
It also began pulling its music from TikTok amid a row over deepfake music on the social media platform. However, the company has since struck a number of licensing agreements, including with TikTok, as it seeks to protect its artists and revenues from the new technology.
In a presentation to investors, Pershing Square argued that the growth of AI would only solidify the role of record labels as a trusted taste-maker and to help artists stand out from the noise.
Universal declined to comment.
The Telegraph, London
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