(Il Sole 24 Ore Radiocor) - Milano, 7 apr - Pershing Square Capital Management said it has submitted a non-binding proposal to buy all outstanding shares of Universal Music Group (UMG).

Under the terms of the deal, UMG shareholders will receive a total of 9.4 billion euros in cash (or 5.05 euros per share) and 0.77 shares in new UMG stock for each share of UMG held.

The total consideration package of cash and stock estimated to be worth 30.40 euros per share, a 78% premium to UMG's stock price.

The transaction will facilitate the cancellation of 17% of UMG shares outstanding while preserving the company's investment grade balance sheet.

All transaction equity financing will be backstopped by Pershing Square and affiliates, and all debt financing will be committed at signing.

'Since UMG's listing, Sir Lucian Grainge and the company's management have done an excellent job nurturing and continuing to build a world-class artist roster and generating strong business performance,' said Pershing Square CEO Bill Ackman. 'However, UMG's stock price has languished 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.' According to Pershing Square, UMG's stock price underperformance is principally due to uncertainty concerning the Bollore Group's 18% stake in the company, the delay of UMG's US listing, the underutilization of UMG's balance sheet, which has led to reduced returns on equity.

The absence of a publicly disclosed capital allocation plan and earnings algorithm and the lack of investor credit in UMG's valuation for its 2.7 billion euro stake in Spotify, and suboptimal shareholder investor relations, communications, and engagement, are also to blame.

In the transaction, UMG will merge with Pershing Square SPARC Holdings and the newly merged company will become a Nevada corporation, listed on the New York Stock Exchange.

Pershing Square expects the transaction to close by year-end.

(RADIOCOR) 07-04-26 09:06:56 (0163) 5 NNNN