Pershing Square Capital Management has submitted a non-binding proposal to acquire all outstanding shares of Universal Music Group through a business combination, outlining a value-creation plan to address the company’s stock underperformance and enhance shareholder returns.
The proposed transaction would merge Universal Music Group with Pershing Square SPARC Holdings, resulting in a newly formed U.S.-listed entity. The combined company would be incorporated in Nevada and listed on the New York Stock Exchange, with financial reporting under U.S. GAAP and potential eligibility for inclusion in major indices such as the S&P 500.
Under the terms of the proposal, Universal Music Group shareholders would receive €9.4 billion in total cash consideration, or €5.05 per share, along with 0.77 shares in the new entity for each existing share held. The total package is valued at approximately €30.40 per share, representing a 78 percent premium to the company’s current stock price.
The transaction is also expected to enable the cancellation of 17 percent of Universal Music Group’s outstanding shares while maintaining an investment-grade balance sheet and preserving long-term financial flexibility. Following completion, the new entity would have approximately 1.541 billion shares outstanding. Pershing Square indicated that all equity financing would be backstopped by the firm and its affiliates, with debt financing committed at signing. The deal is anticipated to close by the end of the year.
Pershing Square cited several factors contributing to Universal Music Group’s stock underperformance, including uncertainty surrounding the Bolloré Group’s 18 percent stake, delays in a U.S. listing, underutilization of the balance sheet, lack of a clear capital allocation strategy, limited investor recognition of its €2.7 billion stake in Spotify, and suboptimal investor communications.
The proposal is accompanied by a broader plan to address these issues, improve capital efficiency, and reposition the company within U.S. capital markets.
KEY QUOTE:
“Since UMG’s listing, Sir Lucian Grainge and the company’s management have done an excellent job nurturing and continuing to build a world-class artist roster and generating strong business performance. However, UMG’s stock price has languished due to a combination of issues that are unrelated to the performance of its music business and importantly, all of them can be addressed with this transaction.”
Bill Ackman, CEO of Pershing Square Capital Management
