A blank check firm backed by hedge fund billionaire Bill Ackman will buy a 10% stake in Taylor Swift’s label Universal Music Group for $ 4 billion, she confirmed on Sunday.
As part of this transaction, a first of its kind for a special acquisition company, Pershing Square Tontine Holdings, Ackman’s investment vehicle, will not distribute the shares to its shareholders until Vivendi, the French owner. of UMG, will have finalized the planned listing of the share on Euronext. Amsterdam.
PSTH will continue to exist after the transaction with access to up to $ 2.9 billion in cash, and “intends to rapidly pursue a business combination with an operating company.” The PSTH said the enterprise value of the new operation was € 35 billion.
Confirmation of the agreement, reported earlier this month by the Financial Times, comes as Vivendi attempts to withdraw money from its lucrative unit amid rising profits in the music business.
The French media group, controlled by billionaire Vincent Bolloré, had previously sold 20% of Universal to Chinese Tencent.
In an email sent to his staff on Sunday, Lucian Grainge, Managing Director of UMG, hailed the deal with Ackman as part of a “new chapter” for the label.
“As you can see from the PSTH announcement, this investment represents a strong validation of UMG, our strategy, our people, our legendary catalog and our incredible roster of artists and authors – composers, ”he wrote.
“And the fact that we now have, in addition to Vivendi, two committed investors – the consortium led by Tencent, as well as PSTH – is as powerful an endorsement as one might imagine from the investment communities and technology. “
PSTH fought off competition from private equity firm Hellman & Friedman, which had offered to buy a 10% stake in Universal at a valuation of 30 billion euros.
Music companies have gained in value in recent years due to rising royalties from streaming services such as Spotify.
The PSTH press release highlighted UMG’s operating profit growth of more than 20% per year since 2017 and analysts’ expectations for profits of more than 1.5 billion euros in 2021, representing a profit margin. operating rate of 19%.
Universal, home to groups such as Kanye West and Lady Gaga, has nearly 30% of the market share, according to estimates from Midia Research.
Spaces are investment vehicles that raise funds through public listings in order to find private companies to advertise, although increased regulatory scrutiny has recently slowed the number of listings.