Universal Music Group (UMG) said on Friday (May 29) its board had reviewed Bill Ackman’s investment firm Pershing Square’s merger offer that would have moved UMG’s primary stock listing to a U.S.-based exchange, saying the April 7 bid “fundamentally and materially undervalues UMG and will not deliver superior value creation,” in a press release.
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The decision follows comments from UMG’s largest shareholder, the Bolloré Group, which owns a combined 28% of UMG’s shares. Cyrille Bolloré, CEO of the Bolloré Group, urged the board to reject the offer, which needs Bolloré’s support to succeed, arguing the price was too low and that Pershing’s takeover bid was structured as an offer “with our money, the company’s money…not with his own money.” Pershing owns roughly 5% of UMG’s stock currently, down from around 10% at its height, and the deal would have resulted in it owning roughly 11% of the new company.
UMG said the board heard from many concerned shareholders and believes there is “strong consensus” behind rejecting the bid, especially following the board’s approval to double its share buyback program, sell half of the company’s stock in Spotify and disclose more detailed financial information.
“UMG has built an unrivaled position in the music industry through clear vision and strong execution,” Sherry Lansing, chairman of the board, UMG said in a statement. “The Board has full confidence in [UMG chairman and CEO Lucian Grainge] and his team’s ability to deliver sustainable growth and continued value creation for all stakeholders.”
Pershing Square, which owns about 5% of UMG, proposed to merge UMG with Pershing Square SPARC Holdings and move its headquarters from the Netherlands, where it currently domiciled and trades on the Euronext Amsterdam, to the U.S. state of Nevada and list the company on the New York Stock Exchange, something Pershing founder Ackman has lobbied for since 2024.
Pershing Square’s offer valued UMG at 55.55 billion euros ($64 billion) based on its forward-looking view that UMG’s stock will be 30.40 euros ($35) per share by the end of 2026. However, if shareholders had elected to receive cash or a mix of cash and stock, the offer would have been for 22 euros a share, or as little as 40.34 billion euros ($43 billion). While the ultimate makeup of equity and cash was undecided, $43 billion would have made the deal worth less than UMG’s valuation when it IPO’d.
In a letter outlining Pershing’s offer, Ackman said UMG’s share price was hurt by not being listed in the U.S., which opens it to more institutional investors and possibly future inclusion in a major stock index, as well as a lack of public capital allocation plan and other key financial disclosures that would help investors better understand the company’s value.
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In response, Grainge said on the company’s most recent earnings call that the UMG board had approved a doubling of its share buy-back program to 1 billion euros and the sale of half of UMG’s equity stake in Spotify, with a portion of the proceeds going to UMG artists as a non-recoupable check. Taylor Swift may have had something to do with that.
In its statement, UMG emphasized the company has increased revenue by 60% and adjusted earnings before interest, tax, depreciation and amortization by nearly 70% since it went public in 2021, and has for the past three years straight represented nine of the top 10 top-selling artists, according to the IFPI Global Artist Chart.
“We remain committed to leading the industry by attracting the world’s top talent, deepening fan engagement globally, and driving innovation,” Grainge said in the statement. “Central to that mission is fostering an environment that champions human creativity, protects artists, songwriters and entrepreneurs, and expands opportunities for growth and success. As we execute our strategy and deliver maximum long-term value, we look forward to providing shareholders with greater insight into the drivers of our performance and future direction of our business.”
