Bill Ackman Pitches $65 Billion UMG Deal to Move Listing to US

Billionaire investor Bill Ackman is pitching a deal for Universal Music Group NV — the record label giant behind celebrities including Taylor Swift and Drake — that he’s claiming will dramatically boost the value of the company largely by moving its listing to the US.

Ackman’s investment firm Pershing Square Capital Management, which controls more than 4.5% of UMG shares, is pushing to combine the record label with an acquisition vehicle publicly traded in the US. Ackman estimated that the deal would value UMG at about €56 billion ($64.8 billion), assuming that a New York listing and a financial reorganization will significantly improve how the market values the company — to the tune of 25 times its earnings from about 16 times.

Ackman’s plan drew immediate skepticism. For one, he will need two-thirds of investors to agree, and will almost certainly have to win over French billionaire Vincent Bolloré, who is UMG’s biggest shareholder with a more-than 18% stake through his family holding company. Without his support, the “proposal looks very much dead from the start,” said Nicolas Marmurek, an analyst at M&A specialist Square Global. “We doubt Bolloré will accept such terms.”

Bloomberg Intelligence Senior Tech Analyst, Matthew Bloxham, joins Paul Sweeney and Alexis Christoforous on "Bloomberg Intelligence" to break down UMG's next steps after Ackman's $65 billion dollar pitch. The complexity of the plan suggests Ackman’s real desire is just to “shake things up” as opposed to orchestrating a massive takeover, Jérôme Bodin, an analyst at Oddo Bhf, said in a note. He described the proposal’s chances of succeeding as “highly uncertain.”

Under the proposed terms, UMG shareholders would get €9.4 billion in cash, or €5.05 per share, plus 0.77 shares of the new company, Pershing Square said in a statement on Tuesday. That would value the stock at €30.40 euros apiece, or a 78% premium to UMG’s last closing price on Thursday, the firm said. Ackman also plans to sell UMG’s stake in Spotify Technology SA, change the dividend policy to an increase of 2% per year and increase its net debt threshold.

Representatives for UMG and major shareholders Vivendi SE and Tencent Holdings Ltd. declined to comment. Bolloré’s family holding company, Bollore SE, didn’t immediately respond to requests.

Read More: The Bill Ackman SPARC Is Getting a Fresh Look Two Years Later

UMG shares jumped 13% to €19.30 at 5:05 p.m. in Amsterdam after earlier gaining as much as 24%. While that’s the biggest intraday gain since the shares were listed in 2021, the stock is still trading well below Ackman’s valuation of the deal. The company had lost 26% of its market value in the last 12 months through its last close on Thursday and was valued at €31.4 billion.

Bolloré Holding

On a call with investors on Tuesday, Ackman said he’d spoken to Bolloré and his investment group and said that they were “intrigued” with the proposal. Pershing Square is “confident that this is a transaction that addresses everyone’s concerns,” Ackman said.

Bolloré’s media holding, Vivendi, owns another 10% of UMG shares. China’s Tencent Holdings Ltd. controls about 11%, according to data compiled by Bloomberg.

Read More: UMG Rises but Holds Below Pershing’s €30.40 Offer: Street Wrap

Ackman has been pushing for UMG to list in the US for years, arguing that the bigger, more liquid market and improved analyst coverage would increase the price. UMG last month scrapped a plan to list shares in New York, citing an uncertain market environment. In a letter to UMG’s board on Tuesday, Ackman said the stock has been hit by an underutilized balance sheet and uncertainty.

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