Bill Ackman has a message for Universal Music Group’s lagging stock price: It’s me, hi, I’m the problem, it’s me. On Tuesday, the enigmatic hedge fund manager proposed a €55 billion (or roughly $63.5 billion) takeover of Universal Music Group, saying he could revive the Amsterdam-based company’s “languished” stock price in large part by moving to America and listing on the New York Stock Exchange. To pull it off, Ackman is proposing a sort of SPAC remix.
SPARC Plug
Ackman’s hedge fund, Pershing Square, took a 10% stake in the company, which owns the rights to major artists and bands including The Beatles and Bob Dylan as well as contemporary superstars such as Bad Bunny, Billie Eilish, Kendrick Lamar and Taylor Swift. In 2021, UMG spun off from French conglomerate Vivendi and went public on the Euronext Amsterdam Stock Exchange; its current headquarters, however, are in Santa Monica, California. Five years after the spinoff, as Pershing noted in a slide deck Ackman shared on X, UMG’s revenue has increased by some 60% and its adjusted EBITDA, a profitability metric, has grown by 70%. In comparison, its share price has slumped roughly 40% from a peak two years ago.
What’s needed now, per Pershing, is a souped-up SPAC-style merger:
- In the proposed deal, UMG would merge with Pershing Square SPARC Holdings, a blank-check special-purpose acquisition rights company established in 2023. Unlike SPACs, which court investors before finding a takeover target, the SPARC gives investors the right to buy in after a target is identified.
- The deal would value the company at around €30 per share, a premium from the €19 per share it traded at on Tuesday.
… Ready for It? Funding for the deal will rely in part on a planned sale of UMG’s stake in Spotify, worth roughly €1.5 billion. Two-thirds of shareholders must approve of the transaction, Pershing said. That means Ackman will have to win over shareholders including French billionaire Vincent Bolloré, whose conglomerate controls a roughly 28% stake in UMG, as well as Chinese tech group Tencent, which holds roughly 11%. Pershing Square’s own stake has been scaled down to around 4.5% in recent years. While Ackman told the Financial Times that he’s confident he has enough support, it’s not as if he has a blank space and can write in his name.