Deal: Bill Ackman’s Hedge Fund Invests $2.8B In Universal Music

  • General
  • August 11, 2021
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  • 4 minutes read
Bill Ackman

It appears that hedge fund tycoon Bill Ackman has a love for Universal Music Group (UMG), a “big three” record label. He’s still pursuing an investment in the company via his hedge fund, Pershing Square, after a similar deal with his special-purpose acquisition company (SPAC) fell through. 

  • Pershing Square and some affiliates have acquired a 7.1% stake in Universal Music Group and then the rights to purchase an additional 2.9%, summing up to 10%. The hedge fund paid $2.8bn for the 7.1% stake, valuing the record label giant at 33 billion euros ($38.8bn).
  • Before now, Ackman’s SPAC named Pershing Square Tontine Holdings had signed an agreement to buy a 10% stake in UMG as the latter neared its debut on the public markets. But that deal was called off after discussions with regulators, Ackman said.
  • It happened that the earlier deal to purchase a 10% stake was quite complex, with Ackman obliging to buy the stake with $4.1bn out of $5.6bn his SPAC had and then spin off the remaining $1.5bn into another separate SPAC. It seems the complexity drew scrutiny from regulators, particularly the US SEC, and made Ackman back down.
  • Pershing Square has purchased a 7.1% stake in UMG and then the rights to buy up 2.9% more, adding to 10%. That 10% stake is exactly what Ackman’s SPAC initially sought.
  • Universal Music is on the verge of an initial public offering on the Euronext NV exchange in Amsterdam. Shareholders of French media conglomerate Vivendi (UMG’s parent firm) overwhelmingly voted in support of spinning off the record label into a separate public company this June.
  • Out of the “big three” record labels, Universal is known to be the biggest music label worldwide.

Photo credit: Insider Monkey

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