Ackman exits Universal Music after $1.5bn share sale

Pershing Square sold 80.6 million Universal Music shares on Thursday, a disposal worth more than $1.5 billion that completed the hedge fund’s full exit from the company. Universal’s stock fell as much as 7.6% in early European trading and was about 6% lower by mid-morning, leaving the share price down nearly 20% year to date.

The sale is expected to generate at least $600 million in profit for Pershing Square. Universal reported it repurchased €250 million of its own shares from Pershing Square as part of an existing €500 million buyback programme. The company bought roughly 0.8% of outstanding stock at €17.66 a share, about an 8% discount to the prior day’s close.

Ackman first took a position in Universal in 2021 after a proposed route via a special-purpose acquisition vehicle was blocked by regulators. Pershing Square bought shares directly ahead of Universal’s spin-off from Vivendi at an average price of €18.27. The fund reduced its holding last year by selling about $1.4 billion of stock at €26.55 per share.

Pershing Square proposed a takeover of Universal months earlier with an offer valued at roughly $65 billion. Universal’s board rejected the proposal as undervaluing the company, and the offer met resistance from the Bolloré family, which holds about 18.5% of the group’s equity and nearly 40% of voting rights.

Analysts at ING wrote that Pershing Square’s exit may carry symbolic significance because of Ackman’s public support for Universal. Pershing Square’s overall investment in the company produced sizeable gains relative to its purchase prices.

Universal Music is listed on Euronext Amsterdam and maintains operational headquarters in Santa Monica, California. The company holds rights to music from a roster of widely known artists.