Bill Ackman’s Pershing Square is looking to sell its 4.7% stake in Universal Music Group after the company rejected its $64.4 billion takeover bid, according to Bloomberg.
The firm is looking to sell roughly 80.6 million shares in an overnight placing, with Bank of America marketing the shares in a range of €17.66 ($20.48) to €18.62 apiece, the outlet reported. At the top of the marketed range, that would raise around €1.5 billion of proceeds.
Representatives for Pershing Square and Bank of America did not immediately return TheWrap’s request for comment.
In April, Pershing proposed a $64.4 billion cash and stock deal in which it would have formed a newly merged company with UMG that would list on the New York Stock Exchange. If approved, the deal was expected to close by year end.
Pershing said at the time that it was submitting the bid due UMG’s “languishing” stock price, which Ackman blamed on the postponement of UMG’s listing in the United States, uncertainty related to Bolloré Group’s 18% stake in the company, 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,” a lack of investor credit in UMG’s valuation for its €2.7 billion stake in Spotify and “suboptimal shareholder investor relations, communications, and engagement.”
However, UMG’s board unanimously determined last week that the proposal “fundamentally and materially undervalues” the company and was “not in the best interests of UMG, its shareholders, artists, songwriters, employees and other stakeholders.”
Following Pershing’s proposal, UMG said it would monetize half of its Spotify stake to help fund an increased share buyback program. UMG also said it would provide the market with enhanced financial disclosure so that its business can be better assessed and understood.
In April, the board authorized an increase in the size of its share repurchase program to €1 billion. At the time, UMG said it would initiate a €500 million buyback following completion of a separate €500 million repurchase program that’s already underway. It noted that the buyback is subject to market conditions and shareholder approval.
Shares of UMG, which sat at €19.20 apiece as of Wednesday, are down 10.4% in the past six months, 12.6% year to date and 29% in the past year, but are up 5% in the past month.
