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Universal Music's New U.S. Investor: Bill Ackman SPAC Closing In On 10% Stake

UMG
VALERIE MACON/AFP via Getty Images

A view of the Universal Music Group (UMG) headquarters is seen on Feb. 9, 2021 in Santa Monica, Calif.

The deal -- which has not yet closed -- values UMG at $40 billion, according to a Wall Street Journal report.

Universal Music Group is landing another anchor investor for its debut as a publicly traded company later this year through a new deal with Pershing Square Capital Management’s special purpose acquisition company (SPAC), which is negotiating to buy a 10% stake in UMG, according to the Wall Street Journal. The company is run by investor and hedge fund manager Bill Ackman.

UMG’s parent company Vivendi has been planning to publicly spin off the music company since last year, and it's now looking like that will happen before the end of the third quarter.

The Pershing deal is not done yet, according to the Wall Street Journal report, but when it's completed it will value the company at about $40 billion. That’s in line with the valuation that Vivendi executives were touting from its accounting firms, PwC and EY, during its last investors call, after it announced its first quarter financial results.

On May 18, Vivendi announced it was considering the sale of an additional 10% stake in Universal Music Group to a U.S. investor. That would now seem to be the Pershing Square Tontine Holding SPAC, which went public on the New York Stock Exchange on Sept. 11, 2020, and has raised more than $4 billion -- enough to make the UMG purchase.

In May, Pershing Square CEO Ackman said at a Wall Street Journal panel that he was "cautiously optimistic" about a deal he had been working on since November 2020.

If this deal closes, Vivendi’s current shareholders would hold a combined 60% stake in UMG, Tencent Corp. would own 20%, the Pershing Square SPAC would own 10% and Vivendi would retain 10%.

UMG could not be reached for comment.