Vivendi will be breathing a sigh of relief.
Universal Music Group‘s majority-owner just revealed that Pershing Square Holdings (PSH), run by billionaire Bill Ackman, has committed to buy an additional 2.9% of UMG for $1.149 billion (USD) based on an enterprise valuation of UMG at €35 billion (EUR).
Today’s news follows Pershing Square’s acquisition of 7.1% of Universal Music Group for $2.8 billion (USD) earlier this month, and brings Pershing Square’s ownership to a total of 10% of UMG’s share capital.
[Update: Pershing Square Holdings has now confirmed that the 2.9% purchase is going through a co-investing affiliate of Pershing Square Holdings named PS VII Master, L.P.]
Vivendi’s announcement today (August 31) is the latest in a series of updates regarding its business relationship with Ackman and his companies over the past couple of months.
Pershing Square Tontine Holdings (PSTH), a US-based special purpose acquisition company (SPAC), run by Ackman, was originally supposed to buy 10% of UMG in a $4 billion transaction, but pulled out of its deal in July.
Ackman announced last month that his SPAC was cancelling the acquisition, and would be transferring its share purchase agreement to another company, Pershing Square Holdings Ltd (which he also runs), instead.
However, on August 10, Pershing Square Holdings (that’s PSH, not PSTH) and “affiliates” confirmed that they had acquired 7.1% of Universal Music Group – rather than 10% – for $2.8bn.
Ackman also secured the option to buy an additional 2.9% of UMG (i.e. the amount required to take his acquisition from 7.1% up to 10%).
Ackman’s deadline for that potential 2.9% extra purchase was September 9, 2021, but he didn’t go the distance: a brief announcement published by Vivendi today confirmed that Ackman’s PSH has now committed to buy the additional 2.9%.
Vivendi is expected to list 60% of UMG on the Amsterdam stock exchange on September 21.
With Vivendi now successfully selling 10% to Ackman’s Pershing Square, and with the upcoming distribution of 60% of UMG’s shares via its Amsterdam listing, by September 21 the French company will have sold some 90% of Universal in the past 18 months.
Vivendi initially sold 10% of UMG to a consortium led by China’s Tencent in Q1 2020, before selling the same consortium an additional 10% in Q1 this year.
Each of those deals cost the Tencent-led consortium €3 billion ($3.5 billion at current exchange rates).
Daniel Kerven, JP Morgan Cazenove’s Head of European Media and Internet Equity Research, suggested in February that his company was now suggesting “a blue sky valuation of €100 billion” for Universal Music Group.Music Business Worldwide