Universal Music Group has declined a massive multi-billion dollar takeover proposal by hedge fund manager Bill Ackman.
According to Variety, the record company announced on Friday (May 29) that the unsolicited offer by Ackman’s Perishing Square Capital was rejected. The offer was originally made on April 7 and was urged to be declined by key UMG shareholder Cyrille Bollore. Pershing Square Capital’s offer included $10.9 billion in cash, along with shares that raise the total consideration to nearly $35 per share.
In a memo, it was shared by UMG’s board of directors that the proposal was "not in the best interests of UMG, its shareholders, artists, songwriters, employees and other stakeholders."
"The Board has taken the time to fully assess the proposal submitted by Pershing Square," the announcement continued. "After careful review with the assistance of outside financial and legal advisors, the Board has rejected the proposal because it fundamentally and materially undervalues UMG and will not deliver superior value creation."
Pershing Square believed that UMG’s stock had been undervalued due to a lack of clarity involving ownership structure and the label's stake in Spotify. Earlier this month, it was announced that the music platform landed a deal with UMG for premium subscribers to recreate select songs from the label’s catalog by using AI.
In addition to the company's primary listing on the Euronext Amsterdam market, Ackman previously struck a deal with UMG last year to create a secondary listing in the U.S.
Following the listing, Ackman commended UMG chairman and CEO Sir Lucian Grainge for "continuing to build a world-class artist roster and generating strong business performance," but claimed that the label’s stock price had "languished."
UMG stands behind its decision to reject Ackman's offer and detailed that expansion of a buyback program, monetizing half of their equity stake in Spotify, and being able to "provide the market with enhanced financial disclosure so that its business can be better assessed and understood."
