Bill Ackman’s Pershing Square Capital Management is set to generate a substantial profit from its long-held investment in Universal Music Group NV as it unwinds its position following the rejection of its latest takeover proposal by the company, according to a report by the Wall Street Journal.
The hedge fund is selling its remaining 80.6 million shares in an overnight block trade arranged by Bank of America Corp, according to marketing materials seen by market participants. Based on indicative pricing, the transaction is expected to raise in excess of $1.5bn, with Pershing Square anticipating profits of at least $600m over the life of the investment, including dividends.
The exit comes just days after Universal’s board rejected Ackman’s acquisition approach, which had valued the company at approximately $65bn. The board argued the proposal materially undervalued the business, which owns a catalogue of global artists including Taylor Swift, Kendrick Lamar and Billie Eilish.
Ackman first established a position in Universal in 2021 and has repeatedly engaged with the company on strategic alternatives, including earlier attempts to structure a transaction involving a special-purpose vehicle and a potential shift of the company’s listing to the United States.
The stake being sold is reportedly being offered at a discount of between 3% and 8% to the company’s recent trading price, in line with typical terms for large block placements.
Universal Music Group’s largest shareholder, the Bolloré family via the Bolloré Group, which holds a significant minority stake and voting control, previously expressed support for rejecting the takeover approach.
Over the course of its investment, Pershing Square has also realised partial gains, including a $1.4bn share sale last year, while having originally built its position at an average price of around €18.27 per share prior to Universal’s spin-out.
Ackman’s involvement in the company has spanned multiple years and structures, including earlier SPAC-related plans that were ultimately abandoned following regulatory concerns. The current exit marks the conclusion of a high-profile engagement with one of the world’s largest music companies.
