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Pershing Square Capital Management, the hedge fund led by billionaire investor Bill Ackman, has submitted a non-binding proposal to take over Universal Music Group (UMG) at €30.40 per share — a significant 78% premium over the company's current trading price. The announcement, made on Tuesday, signals one of the most ambitious moves in the music industry's recent history.
Under the proposed terms, UMG shareholders would receive €5.05 per share in cash, amounting to a total cash payout of approximately €9.4 billion, along with 0.77 shares in a newly formed publicly listed entity for every share they currently hold. The transaction would be executed through a merger with Pershing Square SPARC Holdings, ultimately resulting in a U.S.-listed company trading on the New York Stock Exchange under U.S. GAAP accounting standards — a structure that would make the new entity eligible for inclusion in the S&P 500 index.
Ackman argued that UMG's stock has been chronically undervalued, not because of poor business fundamentals, but due to a series of structural and market-related overhangs. These include uncertainty surrounding the Bolloré Group's 18% stake in the company, a long-delayed U.S. listing, an underutilized balance sheet, the absence of a clear capital allocation strategy, and a lack of investor recognition for UMG's €2.7 billion stake in Spotify. He praised UMG's leadership, crediting CEO Sir Lucian Grainge and his management team for consistently delivering strong operational results despite the stock's sluggish performance.
Pershing Square expects the deal to close before year-end, with full equity financing backstopped by Pershing Square and its affiliates, and debt financing committed at signing. The transaction would retire approximately 17% of UMG's existing shares, leaving the combined company with around 1.54 billion shares outstanding while preserving its investment-grade credit rating. Sullivan & Cromwell, White & Case, Stibbe, and Jefferies are advising on the deal.
