Inside Pershing Square's $64bn Universal Takeover Bid

Bill Ackman's Pershing Square has tabled a US$64bn acquisition proposal for Universal Music Group (UMG), representing one of the largest potential transactions in the entertainment sector.

Pershing Square submitted a cash-and-shares offer on 7 April 2025 through its acquisition vehicle, valuing UMG at US$35 per share. This represents a 78% premium to the last closing price of US$20, placing the total deal value at US$64.3bn.

Universal confirmed receipt of Pershing Square's proposal and said it would assess implications for shareholders, employees, artists and stakeholders. 

The company's board expressed confidence in CEO Sir Lucian Grainge, highlighting his management team and strategy.

Ackman acknowledged areas for improvement, such as the company's "languished" stock price from issues separate to the performance of its music business, suggesting that these issues would all be "addressed with this transaction".

Following the announcement of the proposed takeover, UMG's share price initially soared by nearly 30%. By the afternoon, it was 10% ahead.

Valuation challenges in streaming economics

The premium offered raises questions about fair value assessment in a sector where revenue models continue to evolve. 

Dan Coatsworth, Head of Markets at AJ Bell, discussed the deal in a report, saying: "On paper, you might think UMG is a money-making machine. In reality, it's not that simple."

He continued saying that while UMG is home to "nine of the top 10 global recording artists of 2025", investors have been concerned about slower than expected growth in music streaming, "which matters because UMG relies heavily on the likes of Spotify and Apple Music for royalty payments".

According to industry data, global music revenues have been growing year-on-year as streaming subscriptions helped the industry during periods of increased piracy and financial decline. 

However, artists and investors are often in debate over how much music platforms pay out in royalties, in addition to other aspects that harm music producers, such as AI deepfakes impersonating existing artists.

Revenue recognition has become more complex as TikTok and Instagram have emerged as distribution channels for music consumption. 

In 2024, UMG threatened to pull its songs from TikTok, claiming the platform wasn't paying fair value for music and, in a company statement, said it was concerned about "protecting human artists from the harmful effects of AI, and online safety for TikTok's users".

Dan suggested that while this dispute had been settled, it points to broader concerns around getting paid by social media networks. "Cut-throat competition in the music business also doesn't help. 

“Record labels must plough significant amounts into marketing to make their artists stand above the crowd, and that means Universal must constantly spend money to make money," he added.

Capital markets and listing strategy

If the transaction proceeds, it would position UMG as the only major music label listed on the S&P 500 stock market index in the US. 

This could affect the company's cost of capital, liquidity profile and institutional investor base.

Discussing Bill's financial strategy with the BBC, Adrian Cheesley, a former Senior Vice President at UMG, said he believed the deal wouldn't affect the company on a management level. 

"I think this is about financial engineering, I don't think it's gonna affect the day-to-day running of the business," he said.

Bill praised the group's business management in a statement, saying they had done "an excellent job nurturing and continuing to build a world-class artist roster and generating strong business performance." 

He added that Universal had been instrumental in helping shape the industry's artist-centric focus and that it has shown it can take on growth opportunities using AI while protecting intellectual property.