Billionaire Bill Ackman In Talks To Take Universal Music Public At $40 Billion-Plus Valuation
Universal Music, the largest publisher of music in the world, may be listed on public stock markets through a massive deal with billionaire investor Bill Ackman’s special purpose acquisition company, Pershing Square Tontine Holdings, according to a source. The deal, which is still being negotiated and could still fall apart, would value Universal Music at over $40 billion.
UMG is the owner of renowned labels including Capitol Music Group, Def Jam Recordings, Island and its own brands, among others. Artists in its massive catalogue The Beatles, Justin Bieber, Lady Gaga and Taylor Swift. In the first quarter of 2021, UMG generated 1.8 billion euros of revenue, a 9.4% increase and earnings before interest and taxes of 322 million euros, a 35.8% increase.
Controlled by media conglomerate Vivendi and minority owned by investors including China’s Tencent Group, UMG has been looking at listing on public markets this year. Ackman’s SPAC raised over $4 billion in a July 2020 initial public offering, in a record-sized SPAC public offering. At an enterprise value north of $40 billion, its potential UMG deal would the largest SPAC transaction yet.
Pershing Square declined to comment. An email left with UMG wasn’t immediately returned. The Wall Street Journal earlier reported on the prospective deal.
Since the summer of 2020, Ackman’s been on the hunt for a large company to merge with his SPAC and take public. Last fall, Ackman kicked the tires on businesses like financial data company Bloomberg and was reportedly interested in fintech Stripe, but no deal ever culminated.
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UMG is the largest among a triumvirate of music publishing giants, alongside Sony Music and Warner Music Group. A year ago, Russian billionaire Len Blavatnik listed Warner Music on the on the Nasdaq at a $15 billion valuation, beginning to monetize a massive multi-billion dollar windfall.
Once stagnant, the music publishing business has boomed in recent years due to the rise of streaming media platforms like Spotify and Tencent Music, generating rising revenues for publishers and artists. As streaming media has boomed, large incumbent players like Universal have struck partnerships with newer streaming media companies and even taken on the likes as investors.
Third parties, ranging from private equity giants KKR & Co. and Carlyle Group, to publicly listed vehicles like the Hipgnosisis Songs Fund, have begun purchasing catalogues from musicians in anticipation of rising downloads.
At $40 billion-plus, Ackman SPAC would be betting that the growth and profits in music still remain with massive labels like Universal. Earlier reports of Universal’s potential IPO, pegged its value as high as $50 billion-plus.