Universal Music Group, the global entertainment powerhouse behind artists like Taylor Swift, Sabrina Carpenter, and Kendrick Lamar, has received a takeover proposal valued at $64.3bn (£48bn).
The offer comes from US investment firm Pershing Square, which plans to merge with Universal and list the combined company in the United States, according to billionaire CEO Bill Ackman.
Universal, the world’s largest music company, not only manages a roster of top artists but also operates Abbey Road Studios and owns major labels including EMI and Island Records. Pershing Square already holds a stake in Universal and also invests in companies such as Google, Meta, Amazon, and Restaurant Brands International, which owns Burger King.
Universal has not yet commented on the proposal.
Ackman praised Universal’s management for building a “world-class artist roster” and strong business performance, noting the company has positioned itself at the center of the music industry while leveraging opportunities in artificial intelligence and protecting intellectual property.
However, he criticized the company’s stock performance, saying it has “languished” due to factors unrelated to its core business—issues he believes could be addressed through the proposed transaction.
Dan Coatsworth, head of markets at AJ Bell, cautioned that despite its high-profile artists, Universal’s growth is not guaranteed. He highlighted that streaming revenue, a key source of royalties from platforms like Spotify and Apple Music, has grown more slowly than expected.
In a letter to Universal’s board, Ackman said the company has “dramatically underperformed” several key US and global stock indices. He pointed to challenges including uncertainty over an 18% stake held by the Bolloré Group, as well as a postponed listing of its shares on the New York Stock Exchange. Universal is currently listed in Amsterdam.
Ackman has long advocated for a US listing. He also gained public attention in July 2024 as a prominent supporter of Donald Trump during his presidential campaign, lending a significant business endorsement.
Universal’s stock jumped nearly 30% following news of the offer, settling around 10% higher by Tuesday afternoon.
The music industry’s revenue model has shifted as audiences increasingly turn to platforms like TikTok and Instagram. Coatsworth noted that Universal faced a 2024 dispute over royalties with TikTok, now resolved, underscoring the challenge of monetizing social media streams.
He added that fierce competition in the industry forces record labels to invest heavily in marketing, meaning Universal must continually spend to maintain its revenue streams.
