UMG repurchases – Universal Music Group has repurchased €250 million of its shares from Bill Ackman’s Pershing Square, buying 14,156,285 shares at €17.66 each. The move arrives as Pershing looks to sell down its 4.7% stake and after UMG rejected Ackman’s proposed takeover and m
Universal Music Group moved quickly to pull a sizable block of shares back into its own hands—€250 million worth from Bill Ackman’s Pershing Square—at a moment when Pershing was trying to exit.
UMG repurchased 14,156,285 shares priced at €17.66 (around $20.48) apiece. The company said the buyback was carried out outside its existing €500 million share buyback program. but tied to a previous €500 million share buyback authorized by the board at its annual general meeting of shareholders in May.
UMG said it plans to use the repurchased shares to meet obligations under its 2022 Universal Music Group Global Equity Plan and to “reduce the share capital” of the company. The maximum number of shares that can be used for purposes of the equity plan will remain unchanged.
On Wednesday. Bloomberg reported that Pershing was looking to sell down its 4.7% stake. with roughly 80.6 million shares being placed overnight with Bank of America. The shares were marketed in a range of €17.66 (around $20.48) to €18.62 (around $21.60) apiece. and at the top of that range the placement would raise around €1.5 billion of proceeds.
The timing lands in the shadow of a larger standoff between the two sides. Pershing had earlier put forward a $64.4 billion cash and stock takeover bid to create a newly merged company between Pershing and UMG that would list on the New York Stock Exchange. with a hoped-for close by year end if the deal were approved. Pershing said it made the bid because of UMG’s “languishing” stock price.
Ackman pointed to several drivers behind that slump: the postponement of UMG’s listing in the United States. uncertainty tied to Bolloré Group’s 18% stake in the company. “underutilization of UMG’s balance sheet” leading to reduced returns on equity. the lack of a “publicly disclosed capital allocation plan and earnings algorithm. ” a lack of investor credit in UMG’s valuation for its €2.7 billion stake in Spotify. and what Ackman described as “suboptimal shareholder investor relations. communications and engagement.”.
But UMG’s board unanimously determined last week that the proposal “fundamentally and materially undervalues” the company and was “not in the best interests of UMG, its shareholders, artists, songwriters, employees and other stakeholders.”
After Pershing’s push. UMG said it would monetize half of its Spotify stake to help fund an increased share buyback program. and it also said it would provide the market with enhanced financial disclosure so the business can be “better assessed and understood.” In April. the board authorized an increase in the size of its share repurchase program to €1 billion. UMG said it would initiate a €500 million buyback after the completion of a separate €500 million repurchase program already underway. with the buyback subject to market conditions and shareholder approval.
UMG shares fell 4% to €18.40 apiece on Thursday, leaving the stock down 14% over the past six months, 16% year to date and 32.9% over the past year.
Universal Music Group UMG Pershing Square Bill Ackman share repurchase Global Equity Plan Spotify stake Bollore Group Bank of America New York Stock Exchange