Universal Music’s board has unanimously rejected a $65bn takeover proposal from billionaire Bill Ackman’s Pershing Square Capital, declaring it fundamentally undervalues the company.
The board said the offer, which valued the world’s largest record company at roughly €30.4 per share, was not in the best interests of shareholders or artists.
Pershing Square proposed a cash and stock offer through an acquisition vehicle, which would have merged Universal with a blank-cheque company.
In a statement, Universal said: “The board has rejected the proposal because it fundamentally and materially undervalues UMG and will not deliver superior value creation.”
The company added: “The Board has heard from many of UMG’s shareholders and other stakeholders and believes there is a strong consensus supporting the Board’s decision.”
Universal’s largest individual shareholder, Bollore, also urged the board to reject Ackman’s offer, dealing a swift blow to his plans.
Chief executive Cyrille Bollore said he did not think the deal would “be positive for the company,” effectively closing off a key avenue of support Ackman had been counting on.
Ackman had argued that moving Universal’s listing from Amsterdam to New York would help boost its value, and Pershing also wanted the group to dispose of its entire Spotify holding, valued at about £1.3bn.
Despite listing in 2021, Ackman told investors that Universal had “never graduated from being a private company,” pointing to a share price that has fallen over 20 per cent in the last year.
He 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.”
Ackman continued: “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.”
The proposal would have required the approval of two-thirds of Universal’s shareholders voting at a meeting, with Ackman last month expressing confidence in securing that support.
Pershing Square took a 10 per cent stake in Universal in 2021, shortly before the company floated in Amsterdam with a €46bn valuation, with Ackman serving on the board until last year.
Universal also noted recent plans to expand its share buyback programme and sell half of its stake in streaming giant Spotify, both of which remain “under continuous review.”
Sir Lucian Grainge, chairman and chief executive of Universal Music Group, said: “We remain committed to leading the industry by attracting the world’s top talent, deepening fan engagement globally, and driving innovation.”
Grainge added: “As we execute our strategy and deliver maximum long term value, we look forward to providing shareholders with greater insight into the drivers of our performance and future direction of our business.”