Music giant Universal gets $64bn takeover offer

Music giant Universal gets $64bn takeover offer

Universal Music Group, the iconic entertainment powerhouse that houses talents like Taylor Swift, Sabrina Carpenter, and Kendrick Lamar, has been presented with a proposed acquisition valued at $64.3 billion. The deal, spearheaded by US-based investment firm Pershing Square, aims to merge the company with a new entity that would be publicly listed in America, according to its billionaire founder, Bill Ackman.

The global music leader, which manages Abbey Road Studios and oversees major labels including EMI and Island Records, already holds a stake in Pershing Square. The firm’s portfolio extends beyond music to include tech giants like Google and Meta, as well as Restaurant Brands International, the parent company of Burger King.

“On paper, you might think it’s a money-making machine. In reality, it’s not that simple,” remarked Dan Coatsworth, head of markets at AJ Bell. He highlighted that Universal “is home to nine of the top 10 global recording artists of 2025,” yet growth in the streaming market has fallen short of projections, which is critical because the company heavily relies on platforms like Spotify and Apple Music for royalty income.

Pershing Square’s proposal has prompted Universal to evaluate its potential impact on various stakeholders, including shareholders, employees, and artists. The company’s board has affirmed its trust in CEO Sir Lucian Grainge and his leadership, citing his success in maintaining a top-tier artist roster and driving robust business results.

Ackman emphasized that while Universal has redefined the industry by centering artists and leveraging AI for growth, its stock price has struggled due to factors unrelated to its core music operations. He argued these challenges could be resolved through the merger, which he claims would enhance the company’s financial performance.

In a letter to the board on Tuesday, Ackman noted that Universal has “dramatically underperformed” in major US and international stock indices. He attributed this to uncertainties surrounding Bolloré Group’s 18% stake and the recent decision to delay the company’s New York Stock Exchange listing. Universal is currently traded on the Amsterdam Stock Exchange, but Ackman has long advocated for a US listing.

The company’s share price initially surged by nearly 30% after the takeover news broke, but by late afternoon, it had stabilized at a 10% increase. Ackman’s public support for Donald Trump in July 2024, during the latter’s bid for a second term, was seen as a significant endorsement from the business community.

Universal’s strategy to adapt to shifting revenue models has faced scrutiny, particularly as listeners increasingly turn to platforms like TikTok and Instagram. In 2024, the company threatened to remove its tracks from TikTok, arguing the platform offered insufficient compensation for music. This dispute, though resolved, underscores broader concerns about fair payment from social media networks.

Coatsworth also pointed to intense competition in the music sector, noting that record labels must invest heavily in marketing to ensure their artists stand out. This constant need for expenditure, he said, complicates Universal’s path to profitability, even as global music revenues continue to rise year-on-year.