Shares in Universal Music Group (AEX:UMG) jumped almost 12% to €19.13 after Bill Ackman's Pershing Square proposed a cash-and-shares takeover, aiming to shift the record label colossus to a New York stock market listing.
Under the proposal, UMG shareholders would receive €30.40 per share, a 78% premium to UMG’s stock price, and 0.77 shares in the new entity for each share held.
While home to many of the world's biggest musical artists, including Taylor Swift, Lady Gaga, Coldplay, Nicki Minaj, Elton John and Bad Bunny, Pershing Square said the move aims to address what it sees as a persistent valuation discount since its 2021 Amsterdam listing, despite steady operational performance.
Ackman said: “Since UMG’s listing, Sir Lucian Grainge and the company’s management have done an excellent job nurturing and continuing to build a world-class artist roster and generating strong business performance,”
He added: “However, UMG’s stock price has languished due to a combination of issues that are unrelated to the performance of its music business and importantly, all of them can be addressed with this transaction.”
Uncertainty around the 18% stake held by a vehicle owned by French billionaire Vincent Bolloré, a delayed US listing and what is described as suboptimal shareholder communication and engagement as key drags on the share price.
The takeover proposal is non-binding and expected to complete by the end of the year if approved.
Analyst Dan Coatsworth at AJ Bell said the deal had strong echoes of Warren Buffett’s investing style of buying good businesses going cheap.
"Ackman has now gone full-on Buffett with a takeover offer for Universal Music Group via one of his Pershing Square investment vehicles," he said.
"Ackman has previously argued that UMG would be better served on the US stock market where investors might attribute a higher valuation."
UMG floated in Amsterdam in 2021 and commanded a premium rating of nearly 35 times forward earnings, which has since dropped to around 16 times.
Coatsworth said that while UMG is the world’s largest music company, home to nine of the top 10 global recording artists of 2025, investors have "grown concerned about slower than expected growth in music streaming which matters because UMG relies heavily on the likes of Spotify and Apple Music for royalty payments".
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