Universal Music Group, home to Taylor Swift, Drake, Elton John and other stars receives record $63bn buyout offer

Bill Ackman, one of the most well-known investors in America, has made an offer to buy Universal Music Group (UMG) through his hedge fund Pershing Square Capital at a staggering $63bn (£48bn).

UMG is the largest music label globally, with an estimated 31-38% market share and is home to huge stars including Taylor Swift, Billie Eilish, Adele, Post Malone, Kendrick Lamar and Drake to name but a few. It’s one of the ‘big three’ major record labels, alongside Sony Music Entertainment (20-25%) and Warner Music Group (15%).

In the past, UMG has made unprecedented acquisitions itself, including a monumental $1.9bn (£1.2bn) takeover of EMI back in 2012. The corporation owns many smaller record labels such as Republic Records, Interscope Records, Columbia, Geffen Records and Def Jam under the UMG umbrella. So it’s perhaps not too surprising that it’s valued in the tens of billions of dollars.

If the deal were to be accepted, it would see UMG sold to Pershing Square Capital for a record $63bn and its stock market listing would also be moved from Amsterdam to New York, where Ackman’s hedge fund also has its headquarters. Shareholders would receive $11bn in cash and 0.77 shares in the new company for every UMG share currently owned.

The company’s share price is clearly very central to the deal. UMG shares, which have been listed in Amsterdam for the past five years, have lost 25% of their value in just the last year alone. Ackman hinted that the poor share price performance was in part due a delay of UMG’s listing in the US, but that its “languishing” share performance was “due to a combination of issues that are unrelated to the performance of its music business and importantly, all of them can be addressed with this transaction.”

Referring to UMG’s current CEO, Sir Lucian Grainge, Ackman said he had done “an excellent job nurturing and continuing to build a world-class artist roster and generating strong business performance”.

One of the most powerful executives in the music industry, Grainge has held the title of CEO at UMG since 2010 and was paid a €4.4m base salary last year with an additional €30m in bonuses.

Universal Music Group issued a statement on Monday saying its board of directors will “review the proposal in accordance with its fiduciary duties and analyze its implications for shareholders, employees, artists, songwriters and other stakeholders.”

“The Board of Directors has complete confidence in UMG’s strategy and the leadership of Sir Lucian Grainge and the Company’s management team,” the company said. “UMG will have no further comment on the proposal until the Board of Directors completes its review.”