Bill Ackman’s Pershing Square proposes nearly $65 billion deal to buy Universal Music

Pershing Square has proposed acquiring Universal Music Group in a cash-and-stock deal that values the company at about 55.75 billion euros, or roughly 64.31 billion USD, based on Reuters calculations. The proposal values UMG at about 30.40 euros per share, compared with its last closing price of 17.1 euros.

According to Pershing Square’s announcement, the firm has submitted a non-binding proposal to UMG’s board to acquire all outstanding shares through a business combination with Pershing Square SPARC Holdings. Under the proposal, the merged company, New UMG, would become a Nevada corporation listed on the New York Stock Exchange, with Pershing Square expecting the transaction to close by year-end.

Pershing Square said UMG shareholders would receive 9.4 billion euros in cash, or 5.05 euros per share, along with 0.77 shares of New UMG stock for each UMG share held. It also said the total consideration package represents a 78 per cent premium to UMG’s stock price and would facilitate the cancellation of 17 per cent of UMG’s outstanding shares while preserving the company’s investment-grade balance sheet.

In its statement, Pershing Square CEO Bill Ackman said UMG’s management had continued to build a world-class artist roster and deliver strong business performance, while arguing that the company’s stock price had been weighed down by issues unrelated to the underlying strength of its music business. Pershing Square pointed to factors including uncertainty around Bolloré Group’s stake, the postponed U.S. listing, underutilisation of UMG’s balance sheet, and the absence of a publicly disclosed capital allocation plan and earnings algorithm.