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A control company backed by billionaire hedge fund Bill Ackman will have to buy a 10 per cent stake in Universal Music Group’s Taylor Swift label for $ 4 billion, it confirmed on Sunday.
As part of the transaction, Pershing Square Tontine Holdings, Ackman’s investment vehicle, will be the first to issue shares of this type for a special purchasing company to shareholders after French owner Vivendi UMG completes a planned Euronext share listing. Amsterdam.
PSTH will continue to exist after the transaction when it will have access to $ 2.9 billion in cash, and “intends to conduct a business combination with an operating agent immediately.” The PSTH said the company’s value of the new deal is 35 billion euros.
Confirmation of the agreement, reported Earlier this month, the Financial Times reported that Vivendi was trying to withdraw money from its profit unit amid rising music business profits.
The French media group, controlled by billionaire Vincent Bolloré, previously sold 20 percent of Universal to China’s Tencent.
In an email to his staff on Sunday, UMG CEO Lucian Grainge denounced the deal with Ackman as part of a “new chapter” on the label.
“As can be seen in the PSTH announcement, this investment validates UMG, our strategy, our people, our legendary catalog and an amazing list of artists and songwriters,” he wrote.
“And now, together with Vivendi, we have committed two committed investors – the consortium led by Tencent and the PSTH as well – as much as you can imagine from the investment and technology communities. ”
PSTH outperformed the private equity firm Hellman & Friedman, buying Universal a 10 per cent stake for 30 billion euros.
Music companies have gained value in recent years by paying royalties for streaming services like Spotify.
In the PSTH statement, UMG’s operating profits grew by more than 20 per cent since 2017 and analysts expect profits of more than € 2021 million in 2021, which is a 19% profit margin.
Midia Research estimates that Universal, which includes stocks like Kanye West and Lady Gaga, has a nearly 30 percent market share.
Spacs are investment vehicles that raise money through public listings to find public businesses to be public, even as an increase in regulatory review has slowed the number of listings recently.
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