London
Pershing Square Capital Management, founded by billionaire Bill Ackman, has offered to buy Universal Music Group, the record company behind Lady Gaga, Kendrick Lamar and Sabrina Carpenter among other artists.
The proposal was submitted alongside a “value creation plan,” the fund, where Ackman is also the CEO, said in a press release Tuesday. The complex transaction is expected to close by the end of the year, it added.
Universal Music’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,” Ackman said in the release.
Under the proposal, Universal Music – the world’s largest record company – will merge with Pershing Square SPARC Holdings, a special-purpose acquisition company.
The resulting company will be listed on the New York Stock Exchange, moving Universal Music’s listing from Europe to the United States.
Ackman tried a similar maneuver before. In 2021, he created a SPAC to buy Universal Music, then owned by Vivendi. He acquired 10% of the company but failed to buy the whole entity. Ackman stepped down from Universal Music’s board last year.
The record company, whose artists also include Billie Eilish, Ariana Grande and Florence + the Machine, is currenty listed in Amsterdam, though its operational headquarters are located in Santa Monica, California.
Its shareholders will receive a total of €9.4 billion ($10.9 billion) in cash – or €5.05 per share – and, in return for each Universal Music share they hold, 0.77 shares of the new entity.
The announcement propelled Universal Music’s stock more than 18% higher at the open. By the middle of the day in Amsterdam, it was trading 11.3% up on the day at €19.04.
In a letter to Universal Music’s board of directors, dated Tuesday, Ackman described the company as “high-quality” and “capital-light,” noting “the long-term growth of global music in which streaming penetration and appropriate price increases support long-term, high-single-digit revenue growth for the next decade and likely thereafter.”
