Universal Music Group has rejected a takeover bid from billionaire Bill Ackman’s investment firm Pershing Square, describing the offer as against the best interests of the company.
The music giant said the $64.3bn (£48bn) offer “fundamentally and materially undervalues” the business, which operates Abbey Road Studios and owns labels including EMI and Island Records.
Universal’s board also stated that the offer was “not in the best interests” of shareholders, artists, fans, and other stakeholders connected to the company.
Pershing Square, which already holds a stake in Universal, declined to make any comment following the announcement of the rejection.
The investment firm had launched its takeover bid for the world’s largest music company in April, a move that would have seen Universal listed as a new company in America.
Universal is currently listed on the Euronext Amsterdam stock exchange, rather than a major American exchange.
At the time of the bid, Ackman said Universal’s share price had “languished” due to financial issues unrelated to the performance of its core music business.
Ackman also cited an 18% stake held by Bolloré Group, the family conglomerate of billionaire Vincent Bolloré, as a factor holding Universal back, alongside a delayed New York Stock Exchange listing.
Bolloré’s chief executive, Cyrille Bolloré, had opposed Ackman’s offer, saying it undervalued the company.
Universal’s board said it had full confidence in the strategy being led by chief executive and chairman Sir Lucian Grainge.
The board also promised “enhanced financial disclosures” going forward so the company’s value could be “better assessed and understood” by investors and observers.
Grainge said Universal remained committed to leading the global music industry through innovation, signing top stars, and deepening engagement with fans around the world.
“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,” Grainge said.
Global music revenues have grown year-on-year after streaming subscriptions provided a lifeline to an industry previously undermined by piracy and financial decline.
However, debate continues over the level of royalties paid out by streaming platforms to artists and rights holders across the industry.
The industry is also contending with a rise in AI-generated deepfakes, whereby fraudsters impersonate artists to create songs that flood streaming platforms.