Bill Ackman’s Pershing Square in Talks to Buy 10% of Universal Music for $4B

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Photo Credit: AP

By: Ellen Cans

Billionaire investor Bill Ackman said on Friday that his company Pershing Square Tontine Holdings is in talks to purchase 10 percent of Universal Music Group for roughly $4 billion.

As reported by the NY Post, the 10 percent stake purchase by the Hedge fund management company founded by Ackman in 2003, will be a structured stock purchase, and will not result in a merger.  Universal would still continue to list on the Euronext Amsterdam exchange in the third quarter of this year, as was planned.

The deal valued the Vivendi-owned Universal Music Group at around $42.4 billion, making it the biggest target ever for any special purpose acquisition company, or SPAC.  Universal Music, the world’s leading music company, is majority owned by the French media conglomerate Vivendi which holds an 80 percent stake, and Chinese tech company Tencent owns a minority stake of about 20 percent. Founded 86 years ago, UMG is home to many of the greatest artists, songwriters and song catalogs around the globe including singers Taylor Swift, Lady Gaga and Kanye West.

“Universal Music Group is one of the greatest businesses in the world,” said Ackman. “Led by Sir Lucian Grainge, it has one of the most outstanding management teams that I have ever encountered.”   He added, “Importantly, UMG meets all of our acquisition criteria and investment principles as it is the world’s leading music company, with a royalty on the growing global demand for music. We are delighted to work with Vivendi on this iconic transaction, and look forward to its consummation.”

Vivendi, confirmed talks with Pershing Square, which is located at 787 11th Avenue in New York. Back in May, Vivendi had also hinted that it could opt to sell another 10 percent of its shares to a US investor before the planned IPO.  Vivendi shareholders are slated to vote on the deal at a June 22 investor meeting. In the mean time, even before news of the SPAC, another hedge fund called on French market watchdogs to open an inquiry regarding disclosures around the IPO, as per Reuters.

Over the last year, there has been a fury of SPAC deals.  In the last few months, however, the Securities and Exchange Commission has been watching the activity more closely, leading the frenzy to cool off somewhat.  Pershing Square’s SPAC was among those being eyed carefully, as it raised its IPO target to $4 billion in July 2020, making a very big splash for a blank-check firm.