Wall Street capital premiums by 78% to "surprise" the world's largest music company, proposing a valuation of 55.8 billion euros

Cailian Press April 7th (Editor: Shi Zhengcheng) On Tuesday afternoon Beijing time, well-known investor Bill Ackman’s Pershing Square Capital issued a statement proposing a takeover offer with a premium of up to 78% to shareholders of Universal Music Group (UMG), listed in Europe.

Universal Music is the world’s largest record company, ranking first among the “Big Three” record labels, with artists including Jay Chou, Eason Chan, Taylor Swift, Lady Gaga, and others.

According to Pershing Square Capital’s proposal, Universal Music will merge with a “hot check” company under the firm, and the new company will be registered in the United States and listed on the New York Stock Exchange. Shareholders who approve this deal will receive a total of 9.4 billion euros in cash (equivalent to 5.05 euros per share), and for each share of Universal Music held, they can exchange for 0.77 shares of the new company. The proposal values the company at 55.8 billion euros.

This equates to a per-share transaction value of 3.04 billion euros, a 78% premium over Universal Music’s closing price on the previous trading day. The company’s market capitalization last Thursday was 31.4 billion euros.

The proposal also states that this transaction will cancel 17% of Universal Music’s issued shares, and the new company will be eligible for inclusion in indices such as the S&P 500.

As background, Universal Music listed in Amsterdam, the Netherlands, in 2021. The company’s stock price has fallen from a high of 29 euros to 15.4 euros over the past year.

(Universal Music daily chart, Source: TradingView)

Universal Music’s 2025 annual report shows that, after major shareholders Bollore Family/Vivendi Group and key investor Tencent Holdings, Ackman is also one of the company’s major shareholders. This Wall Street activist investor had previously clashed multiple times with the Universal Music board over poor stock performance and resigned from the company’s board last year.

(Source: Universal Music 2025 Annual Report)

In the “merger announcement,” Ackman wrote that Universal Music has done an excellent job cultivating and building a world-class artist roster, and the poor stock performance is due to a “series of issues unrelated to the music business.”

He believes these issues include the uncertainty surrounding Bollore Family’s holdings, the company’s delay in listing in the U.S., and underutilization of the balance sheet leading to a decline in return on equity.

Under the allure of a 78% premium, Universal Music’s stock surged over 20% at the open on Tuesday, with the latest increase narrowing to about 10%. This also indicates that the market is not very confident that this deal will ultimately go through.

Square Global analyst Nicolas Marmurek, an M&A advisory firm, stated in a report that unless Bollore supports this move, the “proposal seems almost doomed to fail from the start.”

He added: “We doubt whether Bollore will accept such terms; if he already supports this deal, he should be the one recommending and pushing it forward. This seems more like Pershing Square Capital trying to present the proposal directly to shareholders.”

(Cailian Press Shi Zhengcheng)