Pershing Square has submitted a non-binding proposal to acquire the entire share capital of Universal Music Group (UMG) through a merger with its vehicle, Pershing Square SPARC Holdings. The transaction values the music group at approximately €30.40 per share, a 78% premium over the last closing price. UMG shares reached a record high of €29.49 in May 2024. Shareholders would receive a total of €9.4bn in cash (€5.05 per share) as well as 0.77 share of the new merged entity, named "New UMG", which would be listed on the New York Stock Exchange and incorporated in Nevada.

The plan also provides for the cancellation of 17% of the shares outstanding, while maintaining a financial structure compatible with an investment-grade rating. The new entity would adopt US GAAP accounting standards and aim for inclusion in major indices, notably the S&P 500. Pershing Square commits to securing full equity and debt financing upon signing. The activist fund highlights a value creation plan designed to address several factors weighing on the group's valuation, including uncertainty surrounding the Bolloré stake, the delay of a US listing, what it deems inefficient capital allocation and suboptimal financial communication.

Bill Ackman, head of Pershing Square, believes that UMG's stockmarket difficulties do not reflect the strength of its operational fundamentals or the quality of its artist portfolio. He also points to an undervaluation of strategic assets, notably the €2.7bn stake in Spotify. The fund is set to present its project in more detail during an investor webcast, while the transaction, still at a preliminary stage, could be finalized by the end of the year if it receives approval from UMG's board of directors.