Universal Music Group (UMG), the world’s largest music company representing stars such as Taylor Swift, Sabrina Carpenter, and Kendrick Lamar, has received a takeover offer estimated at $64.3 billion (£48 billion). The offer comes from US investment firm Pershing Square, with its billionaire CEO Bill Ackman stating that the merger would see the new company listed in America.

Pershing Square already owns a stake in UMG and has holdings in Google, Meta, Amazon, and Restaurant Brands International, which includes Burger King. Ackman praised UMG’s management for “doing an excellent job nurturing and continuing to build a world-class artist roster and generating strong business performance.” He added that the company has reshaped the industry to center artists and demonstrated an ability to seize growth opportunities from artificial intelligence while protecting intellectual property.

However, Ackman noted that UMG’s stock price has “languished” due to issues unrelated to its music business performance, which could be “addressed with this transaction.” In a letter to its board of directors on Tuesday, he claimed that UMG had “dramatically underperformed” in several key US and global stock indexes, blaming factors such as uncertainty around Bolloré Group’s 18% stake and the postponement of its US listing.

Under the deal terms, UMG shareholders would receive a total of €9.4 billion in cash (€5.05 per share) and 0.77 shares in the new company for each UMG share. The new company would be listed on the New York Stock Exchange. Ackman also said the board would be “refreshed” to include US talent agent and former Walt Disney Company president Michael Ovitz. Pershing aims to close the deal by year-end.

UMG shares rose about 11% in early trading. The company has been approached for comment. This offer could lead to significant shifts in the global music industry, as UMG operates Abbey Road studios and owns labels like EMI and Island Records.

Source: www.bbc.com