The Universal Music Group, the entertainment giant behind acts such as Taylor Swift, Sabrina Carpenter and Kendrick Lamar, has received a takeover offer estimated to be worth $64.3 billion (£48bn).
US investment company Pershing Square is offering to buy Universal in a merger that would see the new company listed in America, its billionaire chief executive Bill Ackman said.
As well as representing a huge list of artists, the world’s largest music company also runs Abbey Road studios and owns labels such as EMI and Island Records.
Pershing Square, which already owns a stake in Universal, also has holdings in Google, Meta and Amazon, as well as Restaurant Brands International, which includes Burger King.
Ackman said its management had “done an excellent job nurturing and continuing to build a world-class artist roster and generating strong business performance.”
He said Universal had reshaped the industry to put artists at its centre, and had shown it could seize growth opportunities from artificial intelligence while protecting intellectual property.
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But he said the company’s stock price had “languished” due to issues unrelated to the performance of its music business, which could all be “addressed with this transaction.”
In a letter to its board of directors on Tuesday, Ackman said Universal had “dramatically underperformed” in several key US and global stock indexes.
He blamed a variety of factors, including uncertainty around Bolloré Group’s 18% stake and its US listing being postponed.
Under the terms of the deal, Universal’s shareholders would receive a total of €9.4bn in cash (€5.05 per share) and 0.77 shares in the new company for each Universal share they owned.
The new company would be listed on the New York stock exchange.
Ackman said its board would also be “refreshed” to include US talent agent and former Walt Disney Company president Michael Ovitz.
Pershing hopes to close the deal by the end of the year.
Universal’s shares were up about 11% in early trading. The company has been approached for comment.
