Universal Music Group's board unanimously rejected Bill Ackman's $64 billion unsolicited takeover proposal, calling it a fundamental undervaluation of the world's largest record label.
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Universal Music rejects $64 billion Pershing Square takeover bid
Universal Music Group's board formally declined an unsolicited $64.4 billion takeover proposal from Bill Ackman's Pershing Square on Friday, calling the bid a "fundamental and material" undervaluation of the world's largest record label.
"The Board has full confidence in Sir Lucian and his team's ability to deliver sustainable growth and continued value creation for all stakeholders," Sherry Lansing, chair of UMG's board, said in a statement. The board unanimously determined that the proposal is "not in the best interests of UMG, its shareholders, artists, songwriters, employees and other stakeholders."
The rejection follows public opposition from UMG's largest shareholder, the Bolloré family, which controls about 31.8% of the company through an 18.4% personal stake and a further 13.4% held by its media group Vivendi. Cyrille Bolloré, chief executive of Bolloré SE, told shareholders Wednesday that the bid relied on the company's own cash rather than Ackman's money. "We think the price is not there at all," he said. "He is not making an offer with his own money. It is our money, the company's money." Bolloré indicated the family would consider selling a "few percent" of its holding only if the share price reached 27 to 28 euros — well above the implied value of Ackman's offer.
Ackman's proposal, structured as 9.4 billion euros in cash plus 0.77 shares of new Pershing Square stock for each UMG share, valued the Amsterdam-listed company at roughly $64 billion. The hedge fund manager, whose Pershing Square already holds about 4.5% of UMG, had planned to shift the company's primary listing from Amsterdam to New York and install Michael Ovitz, co-founder of Creative Artists Agency, on the board. Ackman acknowledged last month that without the Bolloré family's backing, "we don't have a transaction."
The standoff leaves UMG's strategic direction in the hands of Chief Executive Lucian Grainge, who has pursued an aggressive expansion and acquisition strategy since the company's spin-off from Vivendi and Amsterdam listing in 2021. UMG, whose roster includes Taylor Swift, Kendrick Lamar and Adele, said last month it would sell half of its 3% stake in Spotify, worth about 2.7 billion euros — one of the value-unlocking moves Ackman had proposed. Bolloré SE, sitting on 5.6 billion euros in cash and distributing 4.5 billion euros to shareholders, faces no pressure to sell, Cyrille Bolloré said, adding that he supports UMG's current management and strategy. The question now is whether Ackman returns with a higher offer or shifts his activist focus elsewhere.
This article is for informational purposes only and does not constitute investment advice.
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