Bill Ackman’s Pershing Square Capital Management has proposed a cash-and-stock deal to merge Universal Music Group with Pershing Square SPARC Holdings, valuing the music company at about $64 billion.
The proposal would move Universal Music from Amsterdam to the New York Stock Exchange through a new Nevada-based company. Universal Music had not commented on the proposal at the time of writing, while its shares rose more than 12% in Amsterdam after the announcement.
Pershing Square said the proposed transaction values Universal Music Group at €30.40 per share, or about $35.12. The full deal value stands at about €55.75 billion, or $64.31 billion.
The proposed transaction would combine Universal Music with Pershing Square SPARC Holdings, an acquisition vehicle approved by the US Securities and Exchange Commission in 2023.
Under the proposed terms, Universal Music shareholders would receive €9.4 billion in cash, or €5.05 per share, and 0.77 shares in the newly formed company for each Universal Music share they own.
Pershing Square said the cash portion would be funded through SPARC rights holders, debt, and net proceeds linked to its Spotify stake. The deal would also require approval from both company boards, shareholder support, and regulatory clearance before it can move forward.
Ackman said Universal Music’s share price has remained weak because of issues outside the company’s core music business. In a statement on Tuesday, he said, “UMG’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.”
The proposal follows Universal Music’s decision last month to delay a planned US listing. Pershing had argued that a New York listing could improve the company’s valuation and trading liquidity.
Universal Music shares have fallen by almost one-third since the company listed in 2021. Market data in the proposal showed the company trading at 21.8 times long-term earnings, compared with 40 times for Spotify.
Ackman also wrote to Universal Music’s directors and pointed to several factors behind the company’s market value. He cited uncertainty around Bollore Group’s 18% stake, the delayed US listing, and balance sheet use. At the same time, he said management had done an “excellent” job of running the business and delivering strategy.
Universal Music, home to artists including Taylor Swift, Billie Eilish, Drake, and Bad Bunny, did not respond to the proposal at the time of writing. Bollore Group also did not immediately respond, while Vivendi declined to comment. Tencent Holdings, another large shareholder, did not immediately respond either.
The proposal also includes governance changes. Ackman said Michael Ovitz, former Walt Disney Company president and talent agent, would join the board as chairman. Two Pershing representatives would also take board seats. Analysts at ING said the offer is non-binding and may fail, though they said it raises “valid questions” and makes the case for major changes.
Pershing Square said the transaction is expected to close by the end of the year if it receives the required approvals. Market data showed Pershing currently owns a 4.7% stake in Universal Music, making it the company’s fourth-largest shareholder. The proposed merger would also shift the company’s legal base to Nevada and move its stock market listing from Amsterdam to New York.
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