Bill Ackman has unveiled a cash-and-stock bid for Universal Music Group valuing the music giant at roughly $65 billion — sending its shares soaring.
The proposal by Ackman’s hedge fund Pershing Square Capital Management values the music giant, which counts Taylor Swift, Drake and Lady Gaga on its roster of megastars, at about $35 per share — a roughly 78% premium to where the stock was trading before the offer surfaced.
Ackman’s proposal would give shareholders about $10.85 billion in cash and 0.77 shares of new stock per share.
Shares of UMG jumped about 11% after news of Ackman’s takeover proposal surfaced.
Ackman argued that UMG’s stock has underperformed for reasons that have little to do with the strength of its core music business — and said those issues could be fixed through the proposed deal.
“Since UMG’s listing, Sir Lucian Grainge and the company’s management have done an excellent job nurturing and continuing to build a world-class artist roster and generating strong business performance,” he said in a Tuesday statement.
“However, UMG’s stock price has languished due to a combination of issues that are unrelated to the performance of its music business and importantly, all of them can be addressed with this transaction.”
Ackman pointed to several headwinds weighing on the shares, including uncertainty tied to Vincent Bolloré’s roughly 18% stake, delays around a planned US listing and what he described as weak investor communication and outreach.
Under the proposal, UMG would combine with Pershing Square to form a new entity listed on the New York Stock Exchange, with the transaction targeted to close by year-end.
Pershing also called for a shake-up at the board level, including naming Michael Ovitz as chairman and adding two representatives from the hedge fund.
The deal would also require a new employment agreement and compensation package for CEO Lucian Grainge.
UMG was spun off from Vivendi SE in 2021, when it debuted on Euronext Amsterdam with a valuation of about $53.18 billion. The company remains the world’s biggest music label.
Shares of Vivendi and Bolloré rose about 11% and 6.3%, respectively, following news of the proposal.
Ackman has long pushed for UMG to shift its primary listing to the US, arguing the stock trades at a steep discount with limited liquidity.
UMG and Bolloré did not immediately respond to requests for comment. Vivendi declined to comment.
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