Bill Ackman’s Pershing Square is set to raise $1.4 billion from the sale of “about a 2.7% stake” in Universal Music Group.
That’s according to Bloomberg, which reported this afternoon (March 13) that it has seen terms of a deal that show “Pershing Square Holdings Ltd., Pershing Square LP and Pershing Square International Ltd. are poised to price an offering of about 50 million Universal Music shares at €26.60 each”.
Bloomberg also reported that Morgan Stanley is working on the share sale.
In a statement published on X earlier today, Ackman said: “We decided to sell a portion of our UMG position today.”
Added Ackman: “UMG has substantially outperformed the rest of our portfolio (other than the GSEs) year to date in light of its extremely strong recent results.
“UMG was our largest position going into the day at more than ~27% of our capital. After the sale, it will still be our largest position at about ~17% of the portfolio.”
Ackman’s statement on X continued: “[Sir Lucian Grainge] and the UMG team have done a superb job growing the company. We believe UMG is one of the best businesses we have ever owned.
“Late last year, we exercised our registration rights in order that UMG obtains a listing on a major U.S. exchange later this year, which we believe will be extremely beneficial to the company.
“In a world of uncertainty, owning a royalty on music with the best management team in the industry is a blissfully comfortable and profitable place to be.”
Universal Music Group, which is listed on the Euronext in Amsterdam, saw its share price close at €27.90 on Thursday.
UMG published its Q4 and FY 2024 results on last week, posting overall revenues in FY 2024 (across recorded music, publishing, and more) of EUR €11.834 billion (USD $12.81bn), up 7.6% YoY.
The company’s recorded music subscription revenues, meanwhile, hit EUR €4.624 billion annually, up 9.1% YoY, which represented the equivalent of USD $5.00 billion, according to average exchange rates for the year as per IRS data.
The firm’s adjusted EBITDA hit €2.661 billion ($2.88bn), up 13.8% YoY.
In January we reported that Ackman’s Pershing Square Capital Management (PSCM) was closing out an investment fund that held a stake in Universal Music Group and was distributing 47 million shares of the music company to the fund’s co-investors.
The news came the same day that Pershing Square Holdings, a closed-ended fund owned by PSCM, announced it had received regulatory approval to delist from the Amsterdam Euronext stock exchange.
Pershing Square Holdings controlled 10.25% of UMG’s stock at the end of 2023, according to UMG’s annual report for the year.
The 47 million shares that Pershing Square distributed in January amounted to 2.6% of UMG’s outstanding shares. After the distribution, the investment company still held 140 million shares, or 7.6% of UMG, Pershing Square said in a statement in January.
“The PSVII funds have elected to distribute UMG stock to their limited partners rather than cash because we believe that UMG stock is substantially undervalued at its current share price, and the tax-free stock distribution enables our limited partners to continue to own UMG shares,” Pershing Square said at the time.
Pershing Square acquired its 10% stake in UMG in the summer of 2021 through a series of transactions.
As noted by Ackman in his statement published to X today, late last year, Pershing Square requested a secondary listing of UMG on a US stock exchange.
A statement issued by UMG in November in response to the request noted that Pershing is required to sell at least [USD] $500 million in UMG shares as part of the listing.Music Business Worldwide
