\n\t\t\tTrending on Billboard\t\t<\/h3>\n<\/div>\n
\n\tWhile some headlines say Pershing Square\u2019s offer to buy the Universal Music Group (UMG) values the company at $64 billion \u2014 which would make it by far the biggest music industry deal ever \u2014 if you get into the details of the offer, it looks like Pershing Square\u2019s founder and CEO, Bill Ackman<\/strong>, is trying to buy the major on the cheap. At least that\u2019s the assessment of some Wall Street music investors and music industry executives.<\/p>\n \n\tFor one thing, despite all the headlines touting the more than $60 billion valuation of the convoluted offering, the cash option, if it were available for all shares \u2014 which it is not \u2014 wouldn\u2019t even be bigger than UMG\u2019s initial public offering.<\/p>\n \t\t\t\t\tRelated\t\t<\/p>\n<\/h3>\n<\/div>\n \t\t\t\t\tBill Ackman\u2019s Pershing Square Bids to Buy UMG For Over $60\u00a0Billion\t\t<\/p>\n<\/h3>\n<\/div>\n \n\tPershing Square\u2019s valuation is based on its forward-looking view that UMG\u2019s stock price will have a projected value of 30.40 euros ($35) per share on Dec. 31, 2026, which would give the deal a valuation of 55.55 billion euros ($64 billion). However, if you read Pershing Square\u2019s letter to the UMG board, it says UMG shareholders may elect to receive all cash or a mix of stock and cash consideration. If shareholders choose to receive all cash, they will receive 22 euros a share, which would give the deal an overall value of 40.34 billion euros ($43 billion).<\/p>\n \n\tIn short, $43 billion would put the deal below UMG\u2019s valuation after its first day of trading, when it closed at 25.10 euros, giving it a 46 billion euros valuation \u2014 then about $54 billion. But even the $43 billion valuation is a pie-in-the-sky figure, because Pershing Square is only proposing to bring 9.4 billion euros ($10.85 billion) to the table to pay for its deal by injecting 2.5 billion euros ($2.89 billion) in cash, raising 5.4 billion euros ($6.23 billion) in debt and getting another 1.5 billion euros ($1.73 billion) toward the financing by selling UMG\u2019s Spotify holdings.<\/p>\n \n\tThe non-binding offer will pay shareholders 5.05 euros ($5.82) a share and the equivalent of a 0.77 share in new UMG stock, which would see the share count fall by 17%, from 1.833 billion to 1.541 billion shares.<\/p>\n \n\tIf you add in the $2.5 billion that Ackman still has in UMG stock \u2014 he paid $4 billion in 2021 for about 10% of UMG and, in 2025, sold about $1.5 billion of that, leaving him with a 6.2% stake in the company \u2014 that means he\u2019s trying to take control of UMG for a total of about $12 billion, not $64 billion. In addition, he\u2019s only bringing $5.5 billion of Pershing Square\u2019s own money to the table. If shareholders agree to the Pershing Square proposal, at the end of the deal, Pershing will own an 11.7% stake in UMG shares, according to a Billboard<\/em> transcript of a Pershing Square conference call with Wall Street analysts.<\/p>\n \t\t\t\t\tRelated\t\t<\/p>\n<\/h3>\n<\/div>\n \t\t\t\t\tPershing Square\u2019s Universal Music Group Bid: What You Need to\u00a0Know\t\t<\/p>\n<\/h3>\n<\/div>\n \n\tWhat Ackman is really trying to do, say music industry financial executives, is take over UMG on the cheap \u2014 or at the very least, ignite UMG share price increases.<\/p>\n \n\tAs one music industry financial investor puts it, \u201cAckman is saying, \u2018Trust me, I\u2019m the man. I\u2019ll put a great board in; we will get listed in the U.S., and we will get rid of the guys in Europe, and off we go.\u2019 That executive describes the Pershing Square offer as a \u201cnon-transaction transaction. Is he really buying the company or is he saying, \u2018Put me in charge and the company will do better\u2019?\u201d<\/p>\n \n\tA music industry financial executive similarly says, \u201cWhile the offer is impressive on its face, it\u2019s financially structured with very little cash, new debt and a very large equity component in a new UMG structure. Shareholders are not getting a premium in cash; they are taking a bet on the valuation that Pershing Square says it can get in the future.\u201d<\/p>\n \n\tPershing Square is betting that all current shareholders will choose to take the equivalent of 77% of their shares and 5.05 euros, instead of cashing out and choosing to take 22 euros a share. However, if shareholders do choose to take the all-cash payout, the math doesn\u2019t work. As the Barclays Bank European Media Equity research analyst team puts it, \u201cThere is in effect no cash alternative.\u201d<\/p>\n \n\tIf, as Pershing Square expects, existing shareholders choose to take the equivalent of 77% of a share for each share outstanding and 5.05 euros, the cash component works out to 9.3 billion euros, which the money on the table would just about cover. Alternatively, the 9.4 billion euros cash offer on the table will only allow shareholders to buy, at 22 euros a share, 444.3 million shares \u2014 or just 23.3% of outstanding shares.<\/p>\n \t\t\t\t\tRelated\t\t<\/p>\n<\/h3>\n<\/div>\n \t\t\t\t\tUMG Board of Directors Has \u2018Complete Confidence in\u2019 Lucian Grainge Following Pershing Square\u00a0Bid\t\t<\/p>\n<\/h3>\n<\/div>\n \n\tIt\u2019s unlikely that all shareholders will choose to take all cash, and it\u2019s equally unlikely that all of them will choose to instead take the 0.77 a share trade-in deal plus 5.05 euros a share \u2014 meaning it will probably be a combination of both. But as Barclays\u2019 European Media team puts it, either way, \u201cThe number of shareholders that can get \u20ac22.00 per share or 100% cash would be very small.\u201d<\/p>\n \n\tOthers wonder if the offer is even real. \u201cIsn\u2019t he just trying to stimulate share price? He is doing what activist investors do,\u201d says a senior music industry executive.<\/p>\n \n\tIf that was Pershing Square\u2019s main intention, Ackman is off to a good start, as UMG\u2019s stock closed at 19.06 euros on Tuesday (April 7) \u2014 up nearly 11.5% from the April 2 close of 17.10 euros. According to the music industry financial executive, Ackman\u2019s offer served as a huge advertisement that UMG\u2019s stock is undervalued, and \u201che just got at least 10% richer.\u201d<\/p>\n \n\tAckman has previously said he believes UMG shares are undervalued and do not reflect the company\u2019s performance, a point he extensively reiterated on Tuesday\u2019s conference call. He is not alone in that assessment, as others have noted that UMG has been producing strong results but has not been rewarded when it comes to its share price \u2014 something that UMG management agrees with. Just last week, in an apparent bid to boost the share price, UMG announced it would buy back about 500 million euros ($574 million) worth of its shares. In a statement at the time, UMG CFO Matt Ellis<\/strong> said, \u201cWe currently see a meaningful dislocation in UMG\u2019s market valuation.\u201d<\/p>\n \n\tBut that effort isn\u2019t enough for Pershing Square. During the conference call, Pershing executives laid out that while UMG\u2019s performance has been strong, UMG management hasn\u2019t paid enough attention to the share price. In particular, Ackman cited the company\u2019s ownership of about $2.7 billion in Spotify shares and said the market is giving UMG no credit for that stake.<\/p>\n \t\t\t\t\tRelated\t\t<\/p>\n<\/h3>\n<\/div>\n \t\t\t\t\tUniversal Music Group Announces $574M Share Buyback\u00a0Program\t\t<\/p>\n<\/h3>\n<\/div>\n \n\t\u201cThere\u2019s been no presentation by the company of what the plans are for that holding. In general, we hear from shareholders that they just find the business hard to understand, difficulty getting their questions answered,\u201d Ackman said during the conference call, according to the Billboard<\/em> transcript. \u201cThey\u2019re surprised almost every quarter with puts and takes in the earnings. And really this relates to how investor relations have been handled by the company.\u201d<\/p>\n \n\tLater in the call, according to the Billboard<\/em> transcript, Pershing Square Capital Management chief investment officer Ryan Israel <\/strong>said, \u201cWe think that we can add a lot of value [by helping] capital allocation and shareholder communications. And we think the combination of those two things can be very powerful to allow for very significant earnings per share growth over time.\u201d<\/p>\n \n\tDuring the call, Pershing Square outlined where it believes it can deliver value to shareholders. But some worry that despite having a five-year history of UMG ownership, Pershing Square\u2019s understanding of the music business still falls short.<\/p>\n \n\tThe music industry financial executive says there are always \u201cserious concerns about how a financially structured transaction\u201d will impact investment in artists and songwriters. \u201cMany CFOs of the larger financial institutions have shown they are not concerned about investments\u201d in A&R when it comes to getting cost savings to raise a stock price valuation, the executive adds.<\/p>\n \n\tBut Pershing Square\u2019s Israel addressed that concern during the conference call, saying, \u201cWe agree with management that the first priority of the free cash flow of the business is investments and acquisitions that further improve the competitive position of the company.\u201d<\/p>\n \n\tIndustry insiders are nevertheless skeptical that that will remain the case. As another senior music industry executive puts it, \u201cDid you listen to the conference call? It was like the greatest hits of someone who knows just enough to be dangerous.\u201d<\/p>\n [analyse_source url=”https:\/\/www.billboard.com\/pro\/umg-pershing-square-offer-investors-execs-bill-ackman-bid\/”]<\/p>\n","protected":false},"excerpt":{"rendered":" [analyse_image type=”featured” src=”https:\/\/www.billboard.com\/wp-content\/uploads\/2026\/04\/universal-music-group-santa-monica-office-billboard-1800.jpg?w=1024″] Trending on Billboard While some headlines say Pershing Square\u2019s offer to buy the Universal Music Group (UMG) values the company at $64 billion \u2014 which would make it by far the biggest music industry deal ever \u2014 if you get into the details of the offer, it looks like Pershing Square\u2019s founder […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[48,226],"class_list":["post-1873009","post","type-post","status-publish","format-standard","hentry","category-politics","tag-billboard-com","tag-crawlmanager"],"_links":{"self":[{"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=\/wp\/v2\/posts\/1873009","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1873009"}],"version-history":[{"count":0,"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=\/wp\/v2\/posts\/1873009\/revisions"}],"wp:attachment":[{"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1873009"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1873009"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1873009"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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