{"id":254733,"date":"2026-04-07T16:41:19","date_gmt":"2026-04-07T15:41:19","guid":{"rendered":"https:\/\/www.musicbusinessworldwide.com\/?p=254733"},"modified":"2026-04-07T16:47:50","modified_gmt":"2026-04-07T15:47:50","slug":"selling-a-3b-spotify-stake-michael-ovitz-as-chairman-of-the-board-and-a-100b-company-welcome-to-bill-ackmans-plan-for-universal-music-group","status":"publish","type":"post","link":"https:\/\/www.musicbusinessworldwide.com\/selling-a-3b-spotify-stake-michael-ovitz-as-chairman-of-the-board-and-a-100b-company-welcome-to-bill-ackmans-plan-for-universal-music-group\/","title":{"rendered":"Selling a $3B Spotify stake, Michael Ovitz as Chairman of the Board, and a $100B+ company: Welcome to Bill Ackman’s plan for Universal Music Group."},"content":{"rendered":"MBW Reacts is a series of analytical commentaries from Music Business Worldwide<\/a> written in response to major recent entertainment events or news stories. Only MBW+ subscribers<\/span><\/a> have unlimited access to these articles. The below originally appeared in Tim Ingham\u2019s latest \u2018Tim\u2019s Take\u2019 email, issued exclusively to MBW+ subscribers.<\/strong><\/em>\n
\n

David Ellison<\/strong>\u00a0has his New Paramount. Now\u00a0Bill Ackman<\/strong>\u00a0wants his New UMG.<\/p>\n

That’s not just a turn of phrase.<\/p>\n

\u2018New UMG\u2019 is what\u00a0Ackman<\/strong>\u00a0literally calls his proposed restructured Universal Music Group \u2013 apparently taking a page from\u00a0Ellison<\/strong>‘s playbook. (When\u00a0Skydance<\/strong>\u00a0completed its takeover of\u00a0Paramount<\/strong>\u00a0last year, it dubbed the combined company\u00a0\u2018New Paramount\u2019<\/a>\u00a0during the deal process.)<\/p>\n

Ackman<\/strong>‘s proposal to acquire\u00a0Universal Music Group<\/strong>\u00a0landed with the music company’s board this morning (April 7). Whether it goes anywhere is another matter.<\/p>\n

The\u00a0Pershing Square<\/strong>\u00a0proposal is non-binding,\u00a0UMG<\/strong>‘s board hasn’t approved it, and the path to closing \u2014 requiring a two-thirds shareholder vote, regulatory sign-off, and a new employment deal for\u00a0Sir Lucian Grainge<\/strong>\u00a0\u2014 is a long one.<\/p>\n

But the more immediate question may be what\u00a0Ackman<\/strong>‘s move does to the market for\u00a0UMG<\/strong>\u00a0itself.<\/p>\n

Could it invite competing proposals?\u00a0Bollor\u00e9 Group<\/strong>, sitting on an\u00a018%<\/strong>\u00a0stake in UMG, has its own calculations to make. Might the likes of\u00a0Blackstone<\/strong>\u00a0or\u00a0Apollo<\/strong>\u00a0\u2014 who\u00a0have themselves committed billions to music assets<\/a>\u00a0in recent years \u2014 also now see a window?<\/p>\n

Few in the music biz will dispute\u00a0Ackman’s<\/strong>\u00a0central logic when he says that \u201cUMG\u2019s stock price has languished due to a combination of issues that are\u00a0unrelated to the performance of its music business<\/strong>\u201d.<\/p>\n

UMG<\/strong>‘s share price has fallen by\u00a030%+<\/strong>\u00a0over the past year. Ahead of today\u2019s news, that valued Universal at approximately\u00a0EUR \u20ac31 billion (USD $36 billion)<\/strong>\u00a0\u2014 roughly\u00a011 times<\/strong>\u00a0its\u00a02025<\/strong>\u00a0adjusted EBITDA.<\/p>\n

Premium music catalog assets regularly change hands at\u00a0high-teens<\/strong>\u00a0to\u00a020<\/strong>-plus times EBITDA multiples on the private market.<\/p>\n

The world’s largest music company,\u00a0Ackman<\/strong>\u00a0argues, is not currently being valued like one \u2013 and he has a point.<\/p>\n

MBW<\/strong>\u00a0covered the\u00a0headline terms<\/a>\u00a0of\u00a0Ackman<\/strong>‘s takeover proposal here \u2013 but a\u00a0more in-depth letter<\/a>\u00a0from\u00a0Pershing Square<\/strong>\u00a0to\u00a0UMG<\/strong>‘s board of directors reveals some important additional details.<\/p>\n

Here are three of them…<\/p>\n

\n
1. This deal would finally trigger the sale of UMG’s $3B+ Spotify stake \u2014 and artists would get up to \u20ac750 million ($866 million).<\/strong><\/h6>\n

UMG<\/strong>\u00a0first acquired equity in\u00a0Spotify<\/strong>\u00a0at the streaming platform’s launch in\u00a02008<\/strong>. In the years since, as\u00a0Spotify<\/strong>\u00a0has grown into a company worth tens of billions of dollars,\u00a0UMG<\/strong>\u00a0has held onto every share.<\/p>\n

That changes under\u00a0Ackman<\/strong>‘s proposal.<\/p>\n

The\u00a0Pershing Square<\/strong>\u00a0letter confirms that\u00a0\u20ac1.5 billion<\/strong>\u00a0($1.7 billion<\/strong>) in net proceeds from the monetization of\u00a0UMG<\/strong>‘s\u00a0\u20ac2.7 billion<\/strong>\u00a0($3.1 billion<\/strong>)\u00a0Spotify<\/strong>\u00a0stake \u2014 “after taxes and net of the artists’ share of\u00a0Spotify<\/strong>\u00a0proceeds” \u2014 will be used to fund the cash consideration of the bid. The stake will be “sold in the market or in a block transaction.”<\/p>\n

For\u00a0UMG<\/strong>‘s artists, the implications are direct. The letter states that “artists will also benefit from the Transaction by receiving up to\u00a0\u20ac750 million<\/strong>\u00a0($866 million<\/strong>) in proceeds from the sale of\u00a0Spotify<\/strong>\u00a0shares.”<\/p>\n

That commitment has a history.<\/p>\n

In\u00a02018<\/strong>,\u00a0as part of a new deal with\u00a0Taylor Swift<\/strong><\/a>,\u00a0UMG<\/strong>\u00a0confirmed it would distribute any\u00a0Spotify<\/strong>\u00a0sale proceeds to artists on a non-recoupable basis \u2014 meaning artists would receive their share regardless of any outstanding unrecouped advances.<\/p>\n

Swift<\/strong>\u00a0wrote on\u00a0Instagram<\/strong>\u00a0at the time that she had asked\u00a0UMG<\/strong>\u00a0to ensure “any sale of their\u00a0Spotify<\/strong>\u00a0shares result in a distribution of money to their artists, non-recoupable.”<\/p>\n

The major agreed.<\/p>\n

\n
2. Ackman wants Michael Ovitz as UMG’s Chairman of the Board \u2014 citing a 40-year relationship with Sir Lucian Grainge.<\/strong><\/h6>\n

Under\u00a0Ackman<\/strong>‘s proposal, UMG<\/strong>‘s board “will be refreshed to include\u00a0Michael Ovitz<\/strong>\u00a0as Chairman and two representatives from\u00a0Pershing Square<\/strong>\u00a0in addition to members from the current\u00a0UMG<\/strong>\u00a0board”.<\/p>\n

As such, Ovitz would presumably succeed Sherry Lansing<\/strong>, the current Chair of UMG’s board.<\/p>\n

Ovitz<\/strong>\u00a0co-founded\u00a0Creative Artists Agency<\/strong>\u00a0in\u00a01975<\/strong>\u00a0and served as its Chairman until\u00a01995<\/strong>, building the agency into what\u00a0Pershing Square<\/strong>\u00a0describes as the world’s leading talent agency. He subsequently served as President of\u00a0The Walt Disney Company<\/strong>\u00a0from\u00a01995<\/strong>\u00a0to\u00a01997<\/strong>.<\/p>\n

Ackman<\/strong>\u00a0notes that\u00a0Ovitz<\/strong>\u00a0“has a\u00a040-year<\/strong>\u00a0relationship with\u00a0Sir Lucian Grainge<\/strong>“, and describes Ovitz as “one of the most recognized global entertainment executives, having represented many of the most important and iconic music, film, and entertainment acts in the world.”<\/p>\n

“Since UMG’s listing,\u00a0Sir Lucian Grainge<\/strong>\u00a0and the company’s management have done an excellent job nurturing and continuing to build a world-class artist roster and generating strong business performance,”\u00a0added Ackman today<\/a> \u2013 a telling personal compliment for UMG’s long-term boss.<\/p>\n

Ovitz<\/strong>\u00a0is currently a director of\u00a0Pershing Square SPARC Holdings, Ltd.<\/strong>, the acquisition vehicle through which the transaction would be structured.<\/p>\n

\n
3. \u2018New UMG\u2019 could be worth over USD $100 billion by 2031. It was valued at $36 billion last week.<\/strong><\/h6>\n

The\u00a0Pershing Square board letter<\/a>\u00a0includes a detailed\u00a0five-year valuation model<\/strong> for UMG \u2014 and the headline numbers are striking<\/p>\n

UMG<\/strong>\u00a0carried a market cap of approximately\u00a0EUR \u20ac31 billion (USD $36 billion)<\/strong>\u00a0before today\u2019s news, reflecting a share price that has fallen by around a third over the past year.<\/p>\n

Ackman argues this public valuation is\u00a0deeply wrong\u00a0<\/strong>\u2014 and that the structural issues his proposal is designed to fix are all that stand between UMG and a\u00a0significant re-rating<\/strong>\u00a0by investors.<\/p>\n

By year-end 2026 \u2014 roughly when\u00a0Ackman<\/strong>\u00a0expects his deal could close \u2014 Pershing Square projects \u2018New UMG’s\u2019 share price could reach EUR \u20ac32.90, a\u00a092% premium<\/strong>\u00a0vs. UMG’s April 2nd closing price of \u20ac17.11.<\/p>\n

Based on the 1.541 billion shares that\u00a0\u2018New UMG\u2019\u00a0<\/strong>would have outstanding post-transaction, this implies a market cap of approximately\u00a0\u20ac51 billion ($58.5 billion)<\/strong>\u00a0by the end of this year.<\/p>\n

Continuing the logic,\u00a0Ackman\u00a0<\/strong>projects that \u2018New UMG’s\u2019 share price could reach EUR \u20ac71 by year-end 2031 \u2013 more than four times its share price last week.<\/p>\n

Applied to the same post-transaction share count, that implies a market cap of approximately \u20ac109 billion ($126 billion)\u00a0<\/strong>by 2031.<\/p>\n

(In practice, the share count would shrink thanks to the buyback program at the heart of\u00a0Ackman’s proposal<\/strong>, meaning the actual 2031 market cap would be lower, but the per-share value for remaining investors would be higher. My market cap figures here are illustrative.<\/p>\n

In Ackman’s mind, UMG’s growing earnings could combine with a\u00a0NYSE listing<\/strong>\u00a0that would attract a new pool of institutional investors currently unable to buy a European-listed stock.<\/p>\n

\n

<\/a><\/i><\/a><\/a><\/figure><\/p>\n
\n

Central to\u00a0Ackman\u2019s projection<\/strong>\u00a0is a new approach to capital.<\/p>\n

Rather than paying out\u00a050%<\/strong>\u00a0of net income as dividends \u2014\u00a0UMG<\/strong>‘s current policy \u2014 \u2018New UMG\u2019<\/strong>\u00a0would redirect surplus free cash flow toward buying back its own shares, a strategy that typically drives a company’s value higher over time.<\/p>\n

Pershing Square<\/strong>\u00a0estimates\u00a0New UMG<\/strong>\u00a0will generate approximately\u00a0\u20ac15 billion<\/strong>\u00a0($17.3 billion<\/strong>) in total cash over the next five years available for acquisitions and buybacks \u2013 roughly half the company’s entire market cap today.<\/p>\n","protected":false},"excerpt":{"rendered":"

MBW founder Tim Ingham on telling details within Pershing Square’s proposal for a new Universal Music Group<\/p>\n","protected":false},"author":3,"featured_media":254735,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[9],"tags":[130318],"class_list":["post-254733","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","tag-mbw-reacts"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts\/254733","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/comments?post=254733"}],"version-history":[{"count":4,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts\/254733\/revisions"}],"predecessor-version":[{"id":254740,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts\/254733\/revisions\/254740"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/media\/254735"}],"wp:attachment":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/media?parent=254733"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/categories?post=254733"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/tags?post=254733"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}