Bill Ackman’s Pershing Square Capital Management (PSCM) is closing out an investment fund that held a stake in Universal Music Group and is distributing 47 million shares of the music company to the fund’s co-investors.
The news came the same day that Pershing Square Holdings, a closed-ended fund owned by PSCM, announced it had received regulatory approval to delist from the Amsterdam Euronext stock exchange.
Pershing Square Holdings controlled 10.25% of UMG’s stock at the end of 2023, according to UMG’s annual report for the year. The 47 million shares that Pershing Square is distributing amount to 2.6% of UMG’s outstanding shares. After the distribution, the investment company will still hold 140 million shares, or 7.6% of UMG, Pershing Square said in a statement on Thursday.
“The PSVII funds have elected to distribute UMG stock to their limited partners rather than cash because we believe that UMG stock is substantially undervalued at its current share price, and the tax-free stock distribution enables our limited partners to continue to own UMG shares,” Pershing Square said.
At UMG’s current stock price, the PSVII distribution is worth approx. EUR €1.14 billion (USD $1.17 billion), and Pershing Square’s remaining stake in UMG is valued at around €3.395 billion.
Pershing Square acquired its 10% stake in UMG in the summer of 2021 through a series of transactions. The investment company says the PSVII funds, which bought UMG at €18.28 per share, have received dividends of €1.66 per share over the course of the nearly four-year investment.
“The PSVII funds have elected to distribute UMG stock to their limited partners rather than cash because we believe that UMG stock is substantially undervalued at its current share price.”
Pershing Square
At UMG’s closing price of €24.72 on December 31, 2024, the record major has achieved a total return of 46%, including dividends, over that time, Pershing Square said.
“This return compares favorably to the S&P 500’s 37% return and the Amsterdam Exchange Index’s return of 21% over the same period,” the company noted.
Meanwhile, the company announced that it has received the green light to delist Pershing Square Holdings from the Amsterdam Euronext exchange – the same exchange where UMG is traded – at the end of this month. Pershing Square announced Thursday that its last day of trading on the Amsterdam bourse will be January 30, and it will be delisted on January 30.
Shareholders will still be able to trade their shares on the London Stock Exchange (LSE), the company said.
Ackman’s decision to remove Pershing Square from the Amsterdam exchange followed an outburst of violence in the city during a match between the local Ajax football club and Maccabi Tel Aviv in November. Israeli visitors and Jewish people were reportedly assaulted in the streets, in an incident some described as a pogrom.
Ackman, an outspoken supporter of Israel, said in a post on X in November that the violence in Amsterdam was the “tipping point” for the decision to delist from the city’s stock exchange.
“Concentrating the listing on one exchange, the LSE, and leaving a jurisdiction that fails to protect its tourists and minority populations, combine both good business and moral principles. We can also save money and improve liquidity for shareholders to boot,” Ackman wrote.
Ackman has also been pushing for Universal Music Group to shift from the Amsterdam exchange to New York, arguing the move would offer “highly material benefits” to UMG investors, and arguing that Pershing Square has a “contractual right to cause UMG to be listed in the US.”
However, UMG appears to be resisting Ackman’s proposal, arguing that Ackman has the right to request, but not order, the company to shift to a US listing.
Pershing Square Capital Management was valued at around USD $10 billion earlier this year, after a group of investment companies acquired a 10% stake in the company.
Following that blockbuster deal, excitement grew around the launch of Ackman’s new US-headquartered Pershing Square USA. However, after dramatically reducing the investment startup’s IPO price target, Ackman scrapped Pershing Square USA’s IPO this past summer, citing investor uncertainty.Music Business Worldwide