Pershing Square Capital Management has proposed a combination with Universal Music Group NV that would move the listing into a US-based acquisition vehicle in a deal that Bill Ackman’s fund said will value the world’s biggest music label at a 78% premium to its last closing price.
Shareholders who agree to the deal will get €9.4 billion ($10.8 billion), or €5.05 per share, plus 0.77 shares of the new company for each share of Universal Music held, Pershing Square said in a statement on Tuesday. The firm will merge UMG with Pershing Square SPARC Holdings, Ltd., an SEC-registered acquisition company.
Pershing Square estimated the offer to be worth €30.40 per share. Representatives for UMG and major shareholder Vivendi SE declined to comment.
Ackman is proposing a shakeup at the record label, which represents artists such as Taylor Swift and Drake, after shares declined. Ackman, worth about $8.1 billion, according to Bloomberg Billionaires Index, is one of the most well-known and influential activist investors. Over the past few years he has sparred with UMG management, and has pushed for a US listing to increase the valuation of the company’s shares.
“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,” said Pershing Square Chief Executive Officer Bill Ackman.
UMG shares closed at €17.11 on Thursday. The company has lost 26% of its market value in the last 12 months and is valued at €31.4 billion.
Bolloré SE, controlled by French billionaire Vincent Bolloré, is UMG biggest shareholder with a 18.5% stake, while media holding Vivendi, also controlled by the family, owns another 10%.
Unless Bolloré supports the move, the “proposal looks very much dead from the start,” Nicolas Marmurek, an analyst at M&A specialists Square Global, said in a note. “We doubt Bolloré will accept such terms, and had Bolloré been on board he would be recommending the transaction. This is very much a move by Pershing Square to put the proposal in front of shareholders.”
Ackman resigned from the board of Universal Music Group last year, citing other commitments.
The new company will shift its primary stock listing from Amsterdam to the New York Stock Exchange, Pershing Square said. The deal would cancel about 17% of UMG’s shares.
