Universal Music Group responds to Pershing Square’s £48 billion bid
Universal Music Group (UMG) has responded ambivalently to an unsolicited £48 billion buyout offer from billionaire Bill Ackman’s hedge fund.
On April 7th, it was announced that Ackman’s hedge fund, Pershing Square, had set its sights on ownership of the business to which artists such as Drake, Taylor Swift, Olivia Rodrigo, and SZA are signed.
In a statement to Digital Music News, Universal Music Group confirmed that it had received the offer.
Explaining what the process from hereon out will look like, the spokesperson said, “Together with its advisors, [it] will review the proposal in accordance with its fiduciary duties and analyze its implications for shareholders, employees, artists, songwriters, and other stakeholders.”
The statement added, “The Board of Directors has complete confidence in UMG’s strategy and the leadership of Sir Lucian Grainge and the Company’s management team.”
Notably, two-thirds of UMG investors must approve the proposal for it to move to the next stage. To add further complication here, existing investors would have the option of trading each of their shares in the current UMG for the “new” UMG; this would see Pershing up its stake to 11.7 per cent.
Ackman released an initial statement about his offer to buy the business, which nodded toward current turmoil behind the scenes. Ackman explained that while UMG has done an excellent job continuing to put together a world-class roster of music, there is no denying its share price has dropped in recent years.
Among other things, Ackman also said that there was a “lack of investor credit” in the company’s previous valuation of its €2.7 billion stake in Spotify.
However, the official statement ignored his pointed comments, and instead succintly concluded, “UMG will have no further comment on the proposal until the Board of Directors completes its review.”
Shares in UMG dropped in value by more than a quarter in the past year. Nonetheless, since the proposed purchase, they have increased by 11 per cent.
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