William Ackman’s Pershing Square To Acquire 10% of Universal Music Group From Vivendi

Image: Billie Eilish. Source: Universal Music Group

French media giant Vivendi SE has agreed to sell 10% of Universal Music Group (UMG) to Pershing Square Tontine Holdings Ltd (NYSE: PSTH), a special purpose acquisition company (SPAC) backed by billionaire investor William Ackman, for about $4 billion.

The deal — which values the music company at more than $42 billion — is expected to close by September 15, Vivendi said on Sunday. 

The agreement would be the biggest SPAC transaction to date, according to The Wall Street Journal.

Sunday’s announcement also marks the second recent big investment in UMG, which is home to artists including Billie Eilish, Taylor Swift, Justin Bieber and Ariana Grande.

Late last year, a group of investors led by Chinese streaming giant Tencent Music Entertainment Group acquired a 20% stake.

Vivendi said in a statement, “After the 20% equity stake acquired by the consortium led by the Tencent group, the arrival of major American investors provides further evidence of UMG's global success and attractiveness.”

In its own statement, Pershing Square highlighted UMG’s "strategic attributes and competitive advantages" including "predictable, recurring revenue streams that require minimal capital despite high growth." 

It added that it believes "global consumer adoption of streaming will generate many years of high growth."

Ackman’s SPAC also pointed to UMG’s strong operating profit growth of more than 20 percent per year since 2017 and analysts’ predictions that operating profit will hit $1.78 billion in 2021 on revenue of $9.51 billion. 

The transaction comes ahead of Vivendi's plans to spin off UMG via a listing on Euronext Amsterdam in late September. Pershing it will distribute UMG shares to shareholders “promptly following the completion of the listing.”

Last summer, Tontine became the biggest-ever SPAC when it raised $4 billion in an initial public offering, with Pershing Square committing a minimum of an additional $1 billion. 

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Source: Equities News