Pershing Square’s cash-and-shares offer values Universal Music at around 30.40 euros per share, representing a 78% premium to the last closing price of 17.10 euros and making the deal worth 55.75 billion euros ($64.31 billion), according to Reuters calculations.
Universal Music Group, the company behind recording artists including Taylor Swift, Billie Eilish and Drake, did not immediately respond to a request for comment.
The Amsterdam-listed entertainment company’s shares jumped around 13% in early trading on Tuesday, while top shareholder Bolloré Group’s (BOLL.PA) shares were up 6%.
Pershing hopes New York listing will boost UMG shares
Pershing’s move comes after UMG last month delayed a plan for a US listing, walking back on an agreement with Pershing, which had exercised its right to request a US offering and had argued that a New York listing would boost UMG’s share price and liquidity.
In a letter to UMG directors, Ackman said its management had done an “excellent” job of running a strong business and executing its strategy, but its share price has languished since its listing in 2021.
He blamed uncertainty over the 18% stake held by Bolloré Group, the delay to the planned US listing, and the underutilisation of its balance sheet, among other factors.
Under Tuesday’s non-binding proposal, Pershing’s SPARC Holdings would merge with UMG, and the new entity, to be called Nevada Corporation, would be listed on the New York Stock Exchange.
Talent agent and former Walt Disney Company president Michael Ovitz would join the UMG board as chairman, Pershing Square said.
Pershing Square said that, under the transaction, UMG shareholders would receive a total of 9.4 billion euros in cash and 0.77 shares in Nevada for every share held in UMG.
The cash portion of the proposed deal would be funded by Pershing through its SPARC rights holders, debt, and net proceeds from the company’s stake in Spotify (SPOT.N), it said.
