Following Pershing Square’s bid to acquire Universal Music Group (UMG) on Tuesday (April 7), the music giant has confirmed that its board of directors received the “unsolicited and non-binding proposal” in a brief press release in which it expressed “complete confidence in” the company’s strategy under chairman and CEO Lucian Grainge.
“The Board of Directors, together with its advisors, will review the proposal in accordance with its fiduciary duties and analyze its implications for shareholders, employees, artists, songwriters and other stakeholders,” the release reads.
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It adds, “The Board of Directors has complete confidence in UMG’s strategy and the leadership of Sir Lucian Grainge and the Company’s management team. UMG will have no further comment on the proposal until the Board of Directors completes its review.”
The offer from the Bill Ackman-founded investment firm values UMG at more than $60 billion. The proposed deal, which would entail a 9.4 billion euros ($10.85 billion) total cash or 5.05 euros per share ($5.82) offer to shareholders, would result in UMG merging with Pershing Square SPARC Holdings and would move the new entity’s headquarters from the Netherlands to Nevada, while its stock would move from the Euronext Amsterdam to the New York Stock Exchange.
“While business performance has been strong, UMG’s share price has languished,” Ackman wrote in a Tuesday letter to UMG’s board of directors that mentioned uncertainty over UMG investor Bolloré Group’s 18% stake in the company, its decision to delay a U.S. stock offering and the under-utilization of the music company’s balance sheet as reasons for the stock’s overall downward trajectory since its closing price on the first day of trading. “Notably, none of the above issues relate to the company’s execution of its music business, and importantly, all of the above issues can be addressed in a merger transaction.”
Ackman, who held a call to address analysts’ and shareholders’ questions about the proposed deal earlier on Tuesday, wrote that he expects the deal to close by the end of the year.
