Universal Music Rejects Bill Ackman's $65 Billion Takeover Proposal

Richard Janvrin
By: Richard Janvrin
Industry
Universal Rejects Bill Ackman Offer

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Key Takeaways

  • Universal Music rejected a $65 billion takeover proposal from Bill Ackman
  • The company's largest shareholder argued the bid materially undervalued UMG
  • Ackman had planned to move the combined company toward a U.S. listing

According to The Wall Street Journal, Universal Music Group has rejected an offer from Pershing Square Capital, led by Bill Ackman, of about $65 billion after its largest shareholder voiced opposition. 

If accepted, this would've been the latest massive deal following Paramount's deal to acquire Warner Bros. Discovery for $31 per share, and in all, it would be a $111 billion mega-merger. 

The Journal is also reporting that UMG's board of directors assessed the "unsolicited offer" and found that it “fundamentally and materially undervalues UMG and will not deliver superior value creation.”

“UMG has built an unrivalled position in the music industry through clear vision and execution,” said board Chairman Sherry Lansing in a statement, and also said that the board of directors has “full confidence” in Chief Executive Lucian Grainge and his team. 
The Journal contacted Pershing Square for comment, but a spokesperson declined to comment. 

UMG's Largest Shareholder Opposed the Proposal

Cyrille Bollore, the chief executive of the Bollore Group, which is the top UMG shareholder, urged the company to "rebuff the offer," and said that Ackman's proposal undervalued it. 
The Bollore family has an 18.5% stake in UMG and 40% of the voting rights. 
UMG is an outlet that works with some of the biggest stars in the world, including Taylor Swift, Billie Eilish, and Kendrick Lamar. Still, the company's shares are down about 30% over the past 12 months. The Journal adds that, like its peers in the music space, companies within it are facing pressure from the rise of artificial-intelligence music creators and slowing streaming. 

Ackman Argued UMG Was Undervalued

Ackman announced his proposal last month and said that the company's stock price “has languished due to a combination of issues that are unrelated to the performance of its music business,” but also told investors that “without Bollore, we don’t have a transaction.” 
Also, Ackman has praised Grainge for roster building, revenue-driving deals with streaming outlets, and making the most of AI opportunities, all while protecting its intellectual property and that of its artists. 
However, he also mentioned some issues, such as postponing a US listing and "underutilization of its balance sheet," per the Journal. 
With the deal, Ackman was hoping to merge Universal with Pershing Square Sparc Holdings. This would then lead to the new entity being moved to a US listing. 
Universal has operational headquarters in Santa Monica and corporate headquarters in the Netherlands. 
UMG trades on Euronext Amsterdam and began trading there in September 2021 after it spun off from Vivendi, a conglomerate in which the Bollore family is involved. 
Finally, Ackman said that while revenue has grown by 60% since trading there, the company's share price has lagged. 

Richard Janvrin is a graduate of the University of New Hampshire. He started writing as a teenager before breaking into sports coverage professionally in 2015. From there, he entered the iGaming space in 2018 and has covered numerous aspects, including news, reviews, bonuses/promotions, sweepstakes casinos, legal, and more.

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