Universal to sell 10% stake to Pershing Square for $4bn

The deal follows a number of reports earlier this month that PSTH would acquire a stake in UMG. PSTH confirmed that it had entered into an agreement with UMG parent company Vivendi to buy ordinary shares in the music company for $4bn. The deal is expected to close by 15 September, and the shares will be distributed to the company after Vivendi completes the listing of UMG on Euronext Amsterdam, which is expected to take place by 27 September.

PSTH told its investors that UMG had competitive advantages and a “predictable, recurring revenue streams that require minimal capital despite high growth” and added that “the transaction is based on an enterprise value of €35bn for 100% of UMG’s share capital.”

“During the course of our negotiations with Vivendi, it became clear that various tax, legal and other strategic considerations precluded Vivendi from entering into a ‘traditional’ de-SPAC merger transaction, and from selling more than 10% of UMG,” PSTH said.

“Even with the additional complexity, time, legal and other costs that these constraints created, we were convinced that the opportunity to acquire such an extraordinary business was the best option for our shareholders.”

Succeeding the Amsterdam listing and PSTH’s share distribution, UMG will be owned by Vivendi (10%), PSTH (10%) and a consortium led by Tencent Holdings (20%), while 60% of the music company will be traded on Euronext.

Owned by hedge fund billionaire Bill Ackman, PSTH specialises in private mergers, capital stock exchange, asset acquisition and stock purchases. The company’s main strategy is to identify and enter into agreements that create substantial long-term value for its stockholders, with the company leveraging off public companies with strong competitive positions.