Bill Ackman’s Pershing Square Capital Management has put forward a proposal to acquire Universal Music Group (UMG) through a transaction that would relocate the company’s listing from Amsterdam to New York, according to a report by the Financial Times.

The plan involves merging UMG with a special purpose acquisition company (SPAC) backed by Ackman. If completed, the deal would effectively combine the world’s largest music label with a publicly listed blank-cheque vehicle.

Under the proposed terms, UMG shareholders would receive €5.05 in cash along with 0.77 shares in the newly formed entity for each share held. Pershing Square indicated that this structure implies a valuation of €30.40 per UMG share. The hedge fund has been an investor in the company since 2021.

Ackman argued that UMG’s current share price does not reflect the strength of its underlying business, noting that several external factors – rather than operational performance – have weighed on the stock, and suggesting these issues could be resolved through the proposed transaction.

UMG, which represents leading artists such as Taylor Swift and Kendrick Lamar, is the largest player in the global recorded music industry, alongside competitors Sony Music and Warner Music Group.

The company’s shares have fallen by more than 30% over the past six months, amid growing investor concern about the potential impact of artificial intelligence on industry profitability.

Pershing Square also pointed to additional factors it believes have pressured UMG’s valuation, including the lack of a clearly communicated capital allocation strategy and what it sees as an under-appreciation of UMG’s stake in Spotify.

Uncertainty surrounding the future of an approximately 18% holding by the Bolloré Group has also contributed to the discount, according to the hedge fund. The Bolloré family’s conglomerate originally separated UMG from Vivendi in 2021.

UMG has reportedly not yet publicly responded to the proposal.