In a bold move that has sent ripples through global financial and entertainment markets, activist investor Bill Ackman’s US-based hedge fund Pershing Square has launched a public takeover bid for music industry giant Universal Music Group (UMG), arguing that the iconic label’s share price has failed to reflect its massive underlying growth potential.
Announced this Tuesday, the offer proposes a cash-and-stock deal worth 30.40 euros ($35.15) per UMG share, valuing the company – home to A-list recording artists including Taylor Swift, The Weeknd and Lady Gaga – at a total of approximately 55 billion euros. Pershing Square confirmed it has formally submitted the proposal to UMG’s board of directors, with a targeted timeline to close the merger transaction by the end of 2026.
Under the terms of the plan, UMG would merge with Pershing Square SPARC Holdings, a special purpose acquisition firm created by the hedge fund, and the combined new entity would trade publicly on the New York Stock Exchange.
In his official statement accompanying the bid, Ackman emphasized that UMG’s underperformance on public markets stems entirely from external factors unrelated to the core strength of its music operations. He cited three key issues dragging down the stock: ongoing market uncertainty surrounding the future of French conglomerate Bollore’s 18 percent ownership stake in UMG, delays to UMG’s planned listing on US exchanges, and what Pershing Square calls the “underutilisation of UMG’s balance sheet.”
Pershing Square is already a major UMG stakeholder: the firm acquired a 10 percent stake in the music group from French media conglomerate Vivendi – also controlled by the Bollore family – back in August 2021.
In a detailed letter to UMG’s board outlining the proposal’s long-term financial framework, Pershing Square laid out key commitments for the merged company: annual dividend increases of at least 2 percent, and a sustained leverage ratio of 2.5 times operating profit (EBITDA). The letter also confirmed that all remaining free cash flow, after covering required business investments, would be allocated to share repurchase programs to boost shareholder value.
Market reaction to the bid announcement was immediate: UMG shares listed on the Amsterdam stock exchange jumped more than 11 percent in early trading, reaching just over 19 euros by 0950 GMT, as investors digested the long-awaited move for the undervalued media asset.