The Biz: Pershing Square Makes $64B Bid For UMG; CashorTrade’s Ticketmaster Deal; Instagram Claims To Be Superfans’ Home

Pershing Square Capital Management, the investment firm led by Bill Ackman, submitted an offer April 7 to purchase all outstanding shares of Universal Music Group, the world’s largest music company.

Under the terms of the proposal, UMG shareholders would receive €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 estimates the total consideration package to be worth €30.40 ($35.58) per share, a 78% premium on UMG‘s April 2 closing price. That results in a deal valued at €55.8 billion ($64.4 billion).

The deal faces numerous hurdles. It’s non-binding and would require the acquiescence of UMG’s board, two-thirds of the shareholders and regulatory approval. Ackman’s statement indicated general approval of UMG CEO Sir Lucian Grainge, but a takeover would also likely mean a renegotiation of his contract.

“Since UMG’s listing, Sir Lucian Grainge and the company’s management have done an excellent job nurturing and continuing to build a world-class artist roster and generating strong business performance,” Ackman said in a statement. “However, UMG’s stock price has languished due to a combination of issues that are unrelated to the performance of its music business and importantly, all of them can be addressed with this transaction.”

UMG stock is off more than 30% year-to-date, which Ackman attributed to “uncertainty” surrounding an 18% stake held by French conglomerate Bolloré Group; a delay in UMG’s stateside listing; and other factors, including a lack of investor credit for the €2.7 billion ($3.15 billion) stake UMG holds in Spotify, which it acquired when the streamer launched. Ackman intends to sell that stake, with €1.5 billion ($1.7 billion) of it used as part of the takeover bid’s cash consideration. Some €750 million ($866 million) would be distributed to artists under an agreement made by Taylor Swift with UMG in 2018, in which she secured a promise from UMG that any offloading of its Spotify share would be partially distributed to its roster on a non-recoupable basis; in other words, notwithstanding any outstanding advances.

In an investor call April 7, Ackman said he had begun discussions with Bolloré, as it controls enough shares to scuttle the deal (in addition to its 18% direct stake, the conglomerate controls another 10% indirectly through an extant Vivendi holding) and that he intends for Creative Artists Agency co-founder Michael Ovitz to be chairman of the board.

Ticketmaster,
CashorTrade Ink Deal

Thanks to a new partnership with face-value resale marketplace CashorTrade, Ticketmaster has added another way for fans to buy and sell concert tickets for face value or below. CashorTrade’s long-running marketplace allows for a fan-to-fan, incorporating message board and social media communication between buyers and sellers, giving transparency and choice to fans. 

“Fans deserve more ways to buy and sell tickets at the original price, with confidence that what they’re getting is legitimate,” said David Marcus, EVP of Music at Ticketmaster. “By working with CashorTrade, we’re expanding face value resale in a way that gives fans more choice, and we’ll continue to support partnerships with resale platforms that operate with integrity and respect artist terms.”

The integration builds on Ticketmaster’s Face Value Exchange, launched in 2019 to give artists the option to cap resale prices. Artists partnering with CashorTrade are, reflecting its origins, a jam-heavy bunch, including Phish, Stick Figure, Waxahatchee, Daniel Donato, Umphrey’s McGee, Joe Russo’s Almost Dead, The Heavy Heavy, Pigeons Playing Ping Pong and Kitchen Dwellers.

The CashorTrade integration is available for select artist tours currently.

Hush It, TikTok: Instagram Claims To Be True Home Of ‘Superfans’

According to a study commissioned by its corporate parent Meta, Instagram — not YouTube or TikTok — is where the music superfans are.

According to the study from Luminate, superfans are consumers who “pull five of 13 different engagement levers with an artist,” including “ attending live performances, purchasing physical merchandise and serving as a primary word-of-mouth ambassador.”

The study found a 38% engagement rate in Instagram for music fans in general but a 58% rate for identified superfans. That 20% difference is the largest among social media platforms. Of “daily music engagers,” 45% attended at least one live event over the past year, with 25% attending three or more; both rates are higher than similar groups on YouTube or TikTok.