Billionaire Bill Ackman sells 1.42 billion-euro Universal Music stake after failed takeover

[AMSTERDAM] Bill Ackman sold his 1.42 billion euros (S$2.11 billion) stake in Universal Music Group (UMG) just days after the Amsterdam-listed company rejected a takeover bid by the hedge-fund billionaire.

His Pershing Square offered about 80.6 million shares in an overnight placing to investors that priced at 17.66 euros apiece, going by terms seen by Bloomberg. 

Universal Music shares fell as much as 7.6 per cent on Thursday (Jun 4) morning to 17.74 euros, remaining above the offer price that was set at an 8 per cent discount to Wednesday’s closing price.

The company bought back about 14.2 million shares from Pershing’s offering, a Thursday statement said.

Ackman proposed acquiring the home of performers such as Taylor Swift and Drake in April in a deal that would have valued the world’s largest record label at about 56 billion euros.

The company rejected the proposal last week, saying the bid “fundamentally and materially undervalues UMG and will not deliver superior value creation”.

The music industry has enjoyed a number of good years, as the rise of streaming services such as Spotify has boosted revenue, and the value of song catalogs has increased.

But the growth has slowed more recently, and the industry faces challenges from a new generation of artificial intelligence tools that can easily replicate music.

Ackman has had his eye on UMG for years, acquiring a stake in 2021 and at one point sitting on the company’s board.

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His proposal to acquire it, however, was complicated, as it involved merging with a publicly traded special purpose acquisition vehicle and moving the company’s stock market listing to the US from the Netherlands.

Ackman argued that through such steps, he could improve how the market values the business.

The investor is expecting a profit of more than US$600 million on his Universal shares, said a person familiar with his holdings, who asked to not be identified. The Wall Street Journal reported earlier on his gain. BLOOMBERG