Pershing Square Capital Management has made a non-binding offer to acquire Universal Music Group, with headlines citing a $64 billion valuation but details revealing a more modest cash component. The proposal allows shareholders to choose between cash or a mix of cash and new shares. Music investors and executives view the bid as an attempt to take control on the cheap.
Pershing Square founder Bill Ackman outlined the offer in a letter to the UMG board, projecting a share value of 30.40 euros ($35) by December 31, 2026, for an enterprise value of 55.55 billion euros ($64 billion). Shareholders can elect all-cash at 22 euros per share or 5.05 euros plus the equivalent of 0.77 shares in new UMG stock, reducing outstanding shares by 17% from 1.833 billion to 1.541 billion. The firm plans to finance 9.4 billion euros ($10.85 billion) through 2.5 billion euros in cash, 5.4 billion in debt, and 1.5 billion from selling UMG's Spotify holdings, allowing only a fraction of shareholders to take the full cash option, as noted by Barclays analysts who said there is effectively no cash alternative for all shares. Ackman's existing 6.2% stake, bought for $4 billion in 2021 and trimmed by $1.5 billion in 2025, would give Pershing an 11.7% holding post-deal for a total outlay of about $12 billion, according to conference call details with analysts. Post-offer, UMG shares rose nearly 11.5%, closing at 19.06 euros on April 7 from 17.10 euros on April 2. Ackman criticized UMG's investor relations and uncredited $2.7 billion Spotify stake during the call, while chief investment officer Ryan Israel promised better capital allocation. Investors described it as a 'non-transaction transaction,' betting on future value rather than offering a cash premium. One executive said, 'Ackman is saying, “Trust me, I’m the man. I’ll put a great board in; we will get listed in the U.S.”' UMG recently announced a 500 million euro ($574 million) share buyback, with CFO Matt Ellis noting a 'meaningful dislocation' in valuation. Some worry about impacts on artist investments.
