Pershing Square’s non-binding proposal values UMG at €30.40 per share, a 78% premium to its last closing price. Ackman argues the world’s largest music label has been undervalued by structural factors, including the Bolloré Group’s 18% stake and the postponement of a US listing, that have nothing to do with its underlying business.
Bill Ackman’s Pershing Square Capital Management has submitted a non-binding proposal to the board of Universal Music Group to acquire the world’s largest music label in a cash-and-stock deal that Reuters calculates at approximately €55.75 billion ($64.3 billion). The offer values UMG at €30.40 per share, a 78% premium to the stock’s last closing price of €17.10.
Under the proposal, UMG shareholders would receive €5.05 per share in cash, a total cash outlay of €9.4 billion, plus 0.77 shares of a newly created entity, New UMG, for each share held.
The transaction would be structured as a merger with Pershing Square SPARC Holdings, an SEC-registered acquisition vehicle, and the resulting company would list on the New York Stock Exchange under US GAAP accounting, making it eligible for S&P 500 index inclusion.
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Pershing Square said all equity financing would be backstopped by itself and its affiliates, and debt financing would be committed at signing. The company expects the deal to close by the end of 2026.
Ackman has framed the offer as a remedy for structural problems rather than a commentary on UMG’s music business.
In a letter to UMG’s board, he said management under CEO Sir Lucian Grainge had “done an excellent job nurturing and continuing to build a world-class artist roster and generating strong business performance,” but that UMG’s stock price had ‘languished due to a combination of issues that are unrelated to the performance of its music business.’
The four factors he cited: uncertainty over the Bolloré Group’s 18% stake in the company; the postponement of UMG’s planned US stock listing; underutilisation of UMG’s balance sheet; and the absence of a publicly disclosed capital allocation plan and earnings algorithm.
Pershing Square’s involvement with UMG dates to 2021, when Ackman acquired a 10% stake via a deal with Vivendi, UMG’s then-parent. That stake made Pershing Square one of UMG’s largest shareholders before UMG listed on the Amsterdam Euronext exchange in September 2021.
The relationship has not always been smooth: Variety reported Ackman had been ‘sparring with UMG management’ in the period since. The proposed merger would cancel approximately 17% of UMG’s outstanding shares, leaving New UMG with 1.541 billion shares outstanding, while preserving the company’s investment-grade credit rating.
Sullivan & Cromwell, White & Case, and Stibbe are serving as legal advisors to Pershing Square and SPARC. Jefferies is acting as financial advisor. The proposal is non-binding, and UMG’s board has not yet responded publicly.
