Pershing Square’s cash-and-shares offer values Universal Music at around 30.40 euros per share, representing a 78% premium to last close price at 17.10 euros and making the deal worth 55.75 billion euros (US$64.31 billion), according to Reuters calculation.
Universal Music Group – the company behind recording artistes 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 the early trading on Tuesday, while top shareholder Bollore Group’s were up 6%.
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 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 strategic execution, but its share price has languished since its listing in 2021.
He blamed uncertainty over the 18% stake held by Bollore Group, the delay to the planned US listing and under utilisation of its balance sheet, among other things.
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 new proposed deal would be funded by Pershing from its SPARC’s rights holders, debt, and net proceeds from the company’s stake in Spotify, it said.
Bollore Group did not immediately respond to a request for comment.
A spokesperson for Vivendi, which is UMG’s second-largest shareholder, did not comment on the proposal.
Tencent Holdings, UMG’s third-biggest shareholder, did not immediately respond to a request for a comment.
The transaction is expected to close by the end of the year, Pershing Square said. It has a 4.7% stake according to LSEG data, making it UMG’s fourth-biggest shareholder.