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Bill Ackman’s hedge fund, Pershing Square, has proposed a massive transaction to merge Universal Music Group (UMG) with a New York-listed acquisition company, valuing the music giant at up to 55 billion euros.
The activist investor argues that the current stock market significantly undervalues the company, which boasts a premier roster including Taylor Swift and Lady Gaga.
The offer represents a 78% premium over UMG’s recent closing price, providing shareholders with options to exchange their holdings for cash, shares in the new entity, or a combination of both.
To fund the ambitious deal, Pershing Square plans to contribute 2.5 billion euros in capital and raise an additional 5.4 billion euros through debt.
The strategy also involves monetising UMG’s stake in Spotify, a move expected to generate 1.5 billion euros in proceeds, with 750 million euros specifically earmarked for UMG artists.
While Pershing Square would not hold a majority stake under the proposed scenarios, the deal aims to delist the company from European markets in favour of a primary listing on the New York Stock Exchange.
Ackman attributed UMG’s stagnant stock performance to factors unrelated to its core business, such as uncertainty regarding the French conglomerate Bolloré’s stake and an underutilised balance sheet.
He noted that the Bolloré group has expressed preliminary support for the plan, which is essential for the transaction to proceed.
If the merger is finalised by the end of 2026, the new entity intends to implement a consistent dividend growth strategy and maintain a disciplined borrowing ratio to stabilise the sector-leading music firm.
