Vivendi sells 10 percent stake in Universal Music Group to Ackman’s SPAC

Billionaire investor Bill Ackman bought a 10 percent stake in Vivendi’s Universal Music Group for $4 billion, valuing the world’s largest record label — which is home to Drake, Taylor Swift and Billy Eilish — at around $42 billion.

Ackman’s blank-check company Pershing Square Tontine Holdings and Vivendi announced the news on Sunday after weeks of deal talks. UMG, which is being spun off by French parent company Vivendi, still plans to list on the Euronext Amsterdam exchange in late September, the company said.

Ackman’s SPAC said it will distribute UMG shares to shareholders “promptly following the completion of the listing.” Vivendi, controlled by French billionaire Vincent Bolloré, is planning to cash in on its lucrative music company by spinning off the entity to existing shareholders.

Earlier this year, a consortium led by Tencent Holdings bought an additional 10 percent stake in UMG bringing the total equity controlled by the Chinese tech titan to 20 percent.

“The arrival of major American investors provides further evidence of UMG’s global success and attractiveness,” Vivendi said in a statement announcing the deal.

A headshot of Bill Ackman.
Billionaire Bill Ackman said his SPAC paid roughly $4 billion for a 10 percent stake in UMG.
Bloomberg via Getty Images

Ackman’s Pershing Square Tontine, which has access to about $2.9 billion in cash, said it intends to pursue another business combination with an operating business promptly after the UMG deal closes.

The blank-check company pointed to UMG’s strong operating profit growth of more than 20 percent per year since 2017 and analysts’ predictions that operating profit will hit $1.78 billion in 2021 on revenue $9.51 billion.

Tontine became the biggest ever SPAC when it raised $4 billion in an initial public offering last summer, with Ackman’s hedge fund Pershing Square committing a minimum of an additional $1 billion.