UMG Board Rejects Pershing Square Bid

Universal Music Group’s board of directors has rejected a takeover bid from Bill Ackman’s Pershing Square Holdings.

“The Board has taken the time to fully assess the proposal submitted by Pershing Square. After careful review with the assistance of outside financial and legal advisors, the Board has rejected the proposal because it fundamentally and materially undervalues UMG and will not deliver superior value creation. The Board has heard from many of UMG’s shareholders and other stakeholders and believes there is a strong consensus supporting the Board’s decision,” the company said in a statement.

Ackman outlined the proposal in early April. Under the terms of the proposal, UMG shareholders would have received €9.4 billion (almost $11 billion) in cash — equivalent to €5.05 ($5.90) per share — plus 0.77 shares of “New UMG,” a newly created company that would be merged with Pershing Square’s special purchasing acquisition rights arm, registered in Nevada and eligible for New York Stock Exchange listing. UMG shares are currently traded on Amsterdam’s Euronext exchange. 

Last year, Ackman pushed for UMG to relocate stateside and begin trading on American markets. Ackman called for the change after a group of Israeli soccer fans was attacked on the streets of Amsterdam. He later resigned from UMG’s board.

Pershing Square estimated the total consideration package to be worth €30.40 ($35.58) per share, a 78% premium on UMG‘s April 2 closing price. That resulted in a deal valued at €55.8 billion ($64.4 billion).

Earlier this week, Cyrille Bolloré, CEO of Bolloré Group, the largest UMG shareholder, encouraged the board to reject the bid.

At the Bolloré Group’s shareholder meeting, Bolloré said the valuation and funding structure of the deal “is not there at all.”

“He is not making an offer with his own money,” Bolloré said. “It is our money, the company’s money.”

“We remain committed to leading the industry by attracting the world’s top talent, deepening fan engagement globally, and driving innovation,” UMG chairman and CEO Lucian Grange said. “Central to that mission is fostering an environment that champions human creativity, protects artists, songwriters, and entrepreneurs, and expands opportunities for growth and success. As we execute our strategy and deliver maximum long term value, we look forward to providing shareholders with greater insight into the drivers of our performance and future direction of our business.”