Universal Music Group issued a brief statement Monday addressing Bill Ackman’s proposal to acquire the record company, noting that the company’s board of directors and advisors “will review the proposal in accordance with their fiduciary duties and analyze its implications for shareholders, employees, artists, songwriters and other stakeholders.”
“The board has full confidence in UMG’s strategy, Sir Lucian Grainge’s leadership and the company’s management team,” the company said. “UMG will have no additional comment on the proposal until the Board completes its review.”
Ackman’s Pershing Square Capital Management firm unveiled its proposal late Monday, in a takeover bid worth about $63 billion. Ackman said UMG shares are undervalued despite its status as the world’s largest music company, citing several factors including delays in listing UMG on the US stock market (the company is currently traded outside Euronext and Ackman has sought a US listing as well), as well as “suboptimal investor relations, communications and engagement”.
“Since UMG [stock market] existing, [UMG chairman and CEO] “Sir Lucian Grainge and the company’s management have done an excellent job in nurturing and continuing to build a world-class artist roster and generating strong commercial performance. However, UMG’s share price has been weakened by a range of issues that are unrelated to the performance of its music business and, importantly, all of them can be addressed through this transaction,” Ackman said.
If a deal is reached, UMG will merge with Pershing Square SPARC Holdings, and the company will become a Nevada corporation listed on the New York Stock Exchange.
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