Pershing Square is moving to divest its entire position in Universal Music Group after the Amsterdam-listed record company dismissed a takeover proposal earlier this month.
The hedge fund is offering roughly 80.6 million UMG shares in an overnight placing overseen by Bank of America, according to the bank’s press release. Bloomberg reported the shares are being marketed in a price range of €17.66 to €18.62 each, which would translate to around €1.5 billion raised if sold at the top end of that range.
Trading in Amsterdam reflected the news, with UMG shares down nearly 7% in early trade by 07:19 GMT.
Pershing Square expects to record at least $600 million in gains on the almost five-year holding, including dividend receipts, the Wall Street Journal said, citing a person familiar with the matter.
As part of the broader disposal process, UMG itself repurchased about 14.2 million of the shares from Pershing Square at €17.66 per share, paying approximately €250 million in total consideration. That buyback was carried out outside the company’s standing €500 million buyback programme but under an additional €500 million repurchase authorisation that shareholders approved at the annual general meeting in May.
The share sale follows UMG’s rejection last week of the takeover proposal, which would have implied a valuation near €56 billion. The company said the offer "fundamentally and materially undervalues UMG and will not deliver superior value creation."
UMG’s largest shareholder, the Bolloré Group, and its leadership had urged the company to turn down the bid. The Bolloré family holds roughly an 18.5% stake in Universal and controls nearly 40% of the voting rights, positioning it as a key voice in any takeover consideration.
Summary
Pershing Square is selling about 80.6 million Universal Music shares through a Bank of America-managed placing. Bloomberg reported a marketed price band of €17.66-€18.62 per share. UMG shares fell nearly 7% in early Amsterdam trading. Pershing Square expects at least $600 million in profits on the investment, and UMG repurchased about 14.2 million shares at €17.66 each for approximately €250 million under an additional repurchase authorisation approved in May. The stake sale follows UMG’s rejection of a €56 billion valuation takeover offer it deemed materially undervaluing the company.
Impacted sectors: Music industry equities, investment funds and broader equity-market liquidity.