Universal sells $2.8bn stake to Pershing Square

PSH, which trades on the London Stock Exchange, should not be confused with Pershing Square Tontine Holdings (PSTH) – a special purpose acquisition company that is also owned by American investor and hedge fund manager Bill Ackman. In June, PSTH announced that it would acquire 10% of Universal by September and later backtracked on the deal, saying another division of its group would take over the acquisition.

PSH’s acquisition was based on a previously agreed enterprise valuation of Universal, which capped Universal’s price tag at €35bn. The firm did not commit to buying the initial 10% stake offered to PTSH. Additionally, Ackman secured the option to buy the 2.9% shortfall of the initial deal.

“PSH and its affiliates have the right to acquire up to an additional 2.9% of UMG’s ordinary shares at the same price per share by 9 September 2021, which right Pershing Square intends to exercise,” PSH said.

Universal’s parent company, Vivendi, said if Ackman decided to acquire the remaining 2.9% stake, he would buy the shares “through funds which he manages or in which he holds the majority of economic interest, based on the same valuation.”

The billionaire has until 9 September to do so and Vivendi has to sell the 2.9% before it lists on the Euronext Amsterdam stock exchange on September 21.

“Vivendi is very satisfied with the arrival at UMG of Mr Ackman, a major American investor, providing once again evidence of the music company’s global success and attractiveness,” the French media conglomerate said.

Not taking the 2.9% into account, Universal will be owned by Vivendi (10%), PSH (7.1%) and a consortium led by Tencent Holdings (20%) – while 60% of the music company will be traded on Euronext.