Bill Ackman's Pershing Square Capital Management is set to realize a profit exceeding $600 million from its investment in Universal Music Group (UMG), according to recent reports. This significant gain comes despite two prior unsuccessful attempts by the billionaire investor to finalize deals with the music giant. The Wall Street Journal initially reported on the impending profit, stating, "Bill Ackman is set to make hundreds of millions of dollars on his investment in Universal Music Group, despite two unsuccessful attempts to clinch deals with the company."
Pershing Square is now in the process of selling its remaining 4.7% stake in UMG, valued at over $1.5 billion. This divestment follows UMG's recent rejection of Ackman's cash-and-stock takeover proposal, which valued the company at approximately €55.75 billion ($64 billion). Universal Music Group's board deemed the offer to have "materially undervalued" the company, a sentiment echoed by its largest shareholder, the Bolloré family.
The recent takeover bid was Ackman's latest effort to deepen his involvement with UMG, a company he first invested in back in 2021. His initial attempt to acquire a stake in UMG through a Special Purpose Acquisition Company (SPAC) in 2021 was abandoned due to regulatory concerns in the United States. Following that, Pershing Square directly purchased a stake in UMG at a $40 billion valuation and Ackman served on its board until last year.
UMG, home to global artists like Taylor Swift and Kendrick Lamar, is listed on the Euronext Amsterdam stock exchange. Ackman had been a vocal proponent of moving UMG's listing to New York, arguing it would boost the company's share price and liquidity. The Bolloré family, which controls a substantial 18% stake and significant voting rights in UMG, played a crucial role in opposing Ackman's recent takeover offer, with CEO Cyrille Bolloré stating the price "was not there at all."
Pershing Square's exit marks the end of a nearly five-year investment journey in UMG. The firm had already reduced its position last year by selling approximately $1.4 billion worth of shares. While the sale was anticipated after the rejected bid, analysts suggest the departure of a high-profile investor like Ackman could still influence investor sentiment.
