Bill Ackman’s SPAC is in talks to take Universal Music Group public at a $40 billion 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 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 include 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.
Pershing Square declined to comment. An email left with UMG wasn’t immediately returned. The Wall Street Journal earlier reported on the prospective deal.
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, alerting shareholders to its prospective listing a month ago. It appears UMG may chose to go public via SPAC, instead of an outright IPO. SPACs presently sit on over $150 billion in cash to spend taking privately-held companies public. Ackman’s SPAC is the largest in the marketplace.
In July 2020, Pershing Square Tontine Holdings raised over $4 billion in a record-sized initial public offering for the SPAC market. At an enterprise value north of $40 billion, its potential UMG deal would the largest SPAC transaction yet.
Since the summer of 2020, Ackman has 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 deals ever culminated.
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 growing revenues for publishers and artists. As streaming media went mainstream, large incumbent players like Universal struck partnerships with newer streaming media companies, and even taking on the likes of Tencent 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.
