Everyone likes music, good music, even the old wolves of Wall Street, a name given years ago to Bill Ackman, owner of Spac Pershing Square Tontine Holdings. After the rumors published by Wall Street Journal, Ackman confirmed ongoing negotiations with Vivendi, a French media giant, for the purchase of the 10% of the shares of Universal Music Group, the record company that owns the catalogs of historic groups such as the Beatles and Queen and that produces and distributes the songs of Lady Gaga, Ed Sheeran, Taylor Swift, Justin Bieber, just to name a few of the best-known names. Last December Umg took over Bob Dylan's entire catalog of songs, achieving what has been defined the music deal of the century. Finally, in Universal's portfolio there is also 4,5% of Spotify, the most used on-demand streaming music service in the world, with 158 million subscribers and 356 million users overall.
“Universal Music Group is one of the largest businesses in the world”, said Bill Ackman, CEO of PSTH. "Led by Sir Lucian Grainge, it has one of the best management teams I have ever met", continued the US financier, adding that the company "meets all our acquisition criteria and investment principles, as a leading music company ”. In the first quarter of 2021, Universal reported sales of €1,8 billion (+2,2% historically and +9,4% at constant exchange rates and perimeter).
If it goes through, the one between Psth and Vivendi will be a 4 billion dollar operation (approximately €3,3 billion) which would give Universal an enterprise value of €35 billion. "Later this year, after Vivendi completes the planned listing of UMG on the Amsterdam Stock Exchange, PSTH expects to distribute UMG shares to its shareholders", reads the note which also underlines that "unlike many transactions delle Spac, Psth and Umg will not merge into a single company”, specifies Pershing Square Tontine Holdings, which intends to remain listed in New York.
We recall that last February, Vivendi announced the distribution to shareholders of 60% of the capital of its subsidiary as an extraordinary dividend and list Universal Music Group on the Amsterdam Stock Exchange by the end of September. The operation received the green light from a consortium led by the Chinese tech group Tencent, which controls 20% of Universal, after having bought the stake in two tranches (between March 2020 and January 2021) which valued Universal 30 billion of Euro.
The deal between Vivendi and Ackman's spac goes beyond these 30 billion and even exceeds the 33 billion reported in May in the documentation in view of the Vivendi shareholders' meeting on 22 June, reaching € 35 billion, including debts (about 42 billion dollars). Furthermore, thanks to this operation, Grazie Vivendi would find itself with 7 billion in liquidity to invest in the media.
However, it may not have ended here, given that according to what is indicated by the French company itself, Ackman could also decide to buy securities of the parent company Vivendi or further move up into Universal, “Pershing Square funds and their affiliates have indicated they may gain greater economic exposure to UMG, by buying Vivendi stock and/or buying UMG stock after Vivendi distributes UMG stock,” it reads in the note.
In reference to the MY BAG, following the confirmation of the negotiations, in Paris the Vivendi share dropped by 0,55%, while the Bollorè shares (which controls 27% of Vivendi), rose by 1,35%. Finally, in the Wall Street pre-market Pershing Square Tontine lost 6,63%.
