Wall Street’s capital premium of 78% “launches a surprise attack” on the world’s largest music company, proposing a valuation of €55.8 billion

In the afternoon on Tuesday Beijing time, a notice was released by Bill Ackman’s Pershing Square Capital to shareholders of Universal Music Group (UMG), a company listed in Europe, with a transaction proposal offering a premium of as much as 78%.

Universal Music is the world’s largest record company and ranks first among the “Big Three” record companies in the world. Its roster of artists includes Jay Chou, Eason Chan, Taylor Swift, Lady Gaga, and others.

According to Pershing Square Capital’s proposal, Universal Music would merge with the “short-check” company under the control of the institution, and the new company would be incorporated in the United States and listed on the New York Stock Exchange. Shareholders who agree to the transaction would be able to receive a total of EUR 9.4 billion in cash (equivalent to EUR 5.05 per share), as well as 0.77 shares of the new company for each share of Universal Music. The proposal values the company at EUR 55.8 billion.

This implies a transaction value of EUR 3.04 billion per share, representing a 78% premium over Universal Music’s closing price from the previous trading day. The company’s closing market capitalization as of last Thursday was EUR 31.4 billion.

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

As background, Universal Music listed on the Amsterdam stock exchange in 2021. Over the past year, the company’s share price has fallen from a peak of EUR 29 all the way to EUR 15.4.

（Universal Music daily chart, source: TradingView）

Universal Music’s 2025 annual report shows that, after the major shareholder Bolloré Family/Vivendi Group, and major investor Tencent Holdings, Ackman is also one of the company’s key shareholders. This activist investor on Wall Street had previously repeatedly clashed with Universal Music’s board of directors over poor share-price performance, and last year he stepped down from his director role.

（Source: Universal Music’s 2025 annual report）

In the “M&A announcement,” Ackman wrote that Universal Music has done an excellent job in cultivating and building a world-class lineup of artists, and that the poor share-price performance is due to “a series of problems not related to music business performance occurring together.”

He believes these problems include uncertainty around the Bolloré Family’s shareholding, the company delaying its listing in the United States, and the decline in return on equity resulting from not fully utilizing the balance sheet.

Under the lure of a 78% premium, after Universal Music opened on Tuesday, it briefly surged by more than 20%, and the latest gain narrowed to around 10%. This also indicates that the market does not place much confidence in the transaction being finalized.

Square Global, an M&A advisory firm, analyst Nicolas Marmurek said in a report that unless Bolloré supports this move, the “proposal” appears to have been “almost doomed to fail from the start.”

He added: “We doubt whether Bolloré will accept such terms; if he had already supported this deal, then he should have been the one to recommend moving it forward. This is more like a move by Pershing Square Capital attempting to put the proposal directly in front of shareholders.”

（Source: Caixin Global）