Universal Music Group (UMG) stated on Friday (May 29) that its board reviewed Bill Ackman’s investment firm Pershing Square’s merger offer, which aimed to relocate UMG’s primary stock listing to a U.S.-based exchange. The board concluded that the April 7 bid “fundamentally and materially undervalues UMG and will not deliver superior value creation,” according to 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 that 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 currently owns roughly 5% of UMG’s stock, down from around 10% at its peak, and the deal would have resulted in it owning roughly 11% of the new company.
UMG stated that 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 at 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 is currently domiciled and trades on Euronext Amsterdam, to Nevada in the U.S. and list the company on the New York Stock Exchange. This is something Pershing founder Ackman has been lobbying for since 2024.
Pershing Square’s offer valued UMG at €55.55 billion ($64 billion) based on its forward-looking view that UMG’s stock will be €30.40 ($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 per share or as little as €40.34 billion ($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 went public.
In a letter outlining Pershing’s offer, Ackman stated that UMG’s share price was negatively impacted by not being listed in the U.S., which opens it up to more institutional investors and potentially future inclusion in a major stock index. He also mentioned 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 stated during the company’s most recent earnings call that the UMG board had approved doubling its share buyback program to €1 billion and selling half of UMG’s equity stake in Spotify, with part of the proceeds going to UMG artists as non-recoupable checks. Taylor Swift may have influenced this decision.
In its statement, UMG highlighted that it has increased revenue by 60% and adjusted earnings before interest, tax, depreciation, and amortization by nearly 70% since going public in 2021. For three consecutive years, it has represented nine of the top ten top-selling artists according to the IFPI Global Artist Chart.
Grainge emphasized in his statement: “We remain committed to leading the industry by attracting top talent globally, deepening fan engagement worldwide, and driving innovation. Central to this mission is fostering an environment that champions human creativity while protecting artists, songwriters, and entrepreneurs. As we execute our strategy for maximum long-term value delivery, we look forward to providing shareholders with greater insight into our performance drivers and future business direction.”
