Key Takeaways:
Bill Ackman's Pershing Square is selling its remaining 80.6 million shares in Universal Music Group, exiting the nearly five-year investment for at least $600 million in profit after the music giant rejected a takeover bid.
"Pershing Square has decided to monetize its investment in Universal Music Group following the company's decision to decline our proposal," a person familiar with the matter said. Bank of America is marketing the shares at €17.66 to €18.62 apiece, according to terms of the overnight placing.
The sale represents Pershing's entire 4.7% stake in Universal Music, valued at about $1.64 billion based on LSEG data, making it the fourth-biggest shareholder. Universal Music separately repurchased 14.2 million of those shares at €17.66 each for about €250 million, the company said Wednesday, executed outside its existing €500 million buyback program but under a separate €500 million authorization granted at its annual meeting on May 13.
The exit comes days after Universal Music rejected a cash-and-stock offer from Pershing valued at roughly €55.75 billion, saying the proposal "materially undervalued" the company. French billionaire Vincent Bollore, who owns 18.4% of Universal Music as its largest shareholder, had urged the board to reject the bid, arguing it relied on the company's own cash and did not align with its long-term strategy.
Pershing first invested in Universal Music in 2021 through a SPAC deal that was later abandoned after U.S. regulatory scrutiny, instead becoming a major shareholder. Ackman served on the board until last year. The hedge fund projects earning at least $600 million in profit, including dividends, from the investment, according to the Wall Street Journal.
The sale signals Pershing's inability to gain a foothold in one of the world's largest music companies despite two attempts at a deal. Universal Music shares fell on the news, deepening their year-to-date decline. Investors will watch whether the share overhang from the block sale pressures the stock further in the near term.
This article is for informational purposes only and does not constitute investment advice.
