Umg sinks in Amsterdam: Pershing Square sells its stake after 'no' to proposed purchase

 (Il Sole 24 Ore Radiocor) - Universal Music Group fell on the Amsterdam Stock Exchange, after Bill Ackman's Pershing Square fund gave up its stake in the record major that rejected its takeover proposal in recent days. A portion of the shares was bought back by Umg itself. The title of the music industry giant is in the tail platoon of both the Aex index and the Stoxx Europe.

Umg announced that it had repurchased 14.2 million of its own shares at a unit price of EUR 17.66, an 8% discount to Wednesday's closing price, for a total consideration of EUR 250 million. The buyback was made outside of the EUR 500 million buyback programme, Universal Music specified. According to media reports on Wednesday evening, Pershing Square offered a total of around 80.6 million Umg shares for sale via an accelerated overnight placement.

The Wall Street Journal, citing a sales document filed by Bank of America, writes that the value of the sale amounts to $1.5 billion. The fund as a whole expects to make at least $600 million in profits, including dividends, from the nearly five-year investment, according to a source familiar with the facts.

Ackman sold its stake a few days after Universal rejected a $65 billion takeover offer from a Pershing Square investment vehicle. Universal's board of directors said the proposal undervalued the company. The deal had, moreover, met with opposition from the music group's main shareholder, French group Bolloré, which has 18.5% of the capital and almost 40% of Umg's voting rights. Ackman's bid aimed to merge Universal with another listed company, Pershing Square Sparc Holdings, and to transfer the listing of the new entity to the New York Stock Exchange.

Ackman's interest in Umg dates back to 2021, when the company proposed a complex transaction to acquire a 10% stake from its then owner, the French media conglomerate Vivendi. The transaction was abandoned following opposition from regulators. The stake was then acquired by Pershing Square at an average price of EUR 18.27 per share, prior to Universal's spin-off from Vivendi. Last year, Pershing Square sold Universal shares worth USD 1.4 billion at a price of EUR 26.55 per share. The remaining stake was offered at a discount of between 3 per cent and 8 per cent to Universal's closing price on Wednesday, which was around EUR 19, according to the Bank of America statement. Block sales of this size generally involve a discount. As the news reported, Ackman also had a personal connection to Universal. From contacts with executives, the financier learned that the company owned recordings of his grandfather, author of a 1926 hit song entitled 'Put Your Arms Where They Belong (For They Belong to Me)'.