Universal Music Group says it will monetize half of its Spotify stake to help fund an increased share buyback program as it looks to boost its stock price.
“Given the importance of capital discipline, the expected returns from buying back UMG’s shares, and the Company’s confidence in the the long-term growth of the ecosystem, in March 2026 the Board authorized the monetization of half of the Company’s equity stake in Spotify,” UMG said in a statement on Wednesday along with its first quarter earnings results. “Consistent with the Company’s approach to artist compensation, artists will share in the proceeds. UMG’s share will initially be directed towards its buyback program.”
The board has authorized an increase in the size of its share repurchase program to €1 billion. UMG says it will initiate a €500 million buyback following completion of a separate €500 million repurchase program that’s already underway. The latest buyback is subject to market conditions and shareholder approval.
UMG said it would use the repurchased shares to meet its obligations under the company’s global equity plan and to “reduce the share capital of the company.” The board may further increase the buyback authorization at a later date, subject to market conditions.
The moves come after a $64.4 billion takeover bid was submitted by Bill Ackman’s Pershing Square.
Ackman said he was submitting the bid due to UMG’s “languished” stock price, which he blamed on its 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.”
The proposed cash-and-stock deal, which Pershing Square expects to close by year end, would form a newly merged company with UMG that would list on the New York Stock Exchange. UMG shareholders would receive a total of €9.4 billion ($10.87 billion) in cash. Each share will be exchanged for €5.05 ($5.84) in cash and 0.77 shares of new UMG stock for each share of UMG held. That amounts to a total deal value of €30.40 euros per share, a 78% premium to UMG’s closing share price on April 2.
The deal would be subject to approval by UMG and SPARC’s boards of directors, a two-thirds vote by UMG shareholders and required regulatory approvals. UMG’s board of directors and advisers previously said they would review the proposal in accordance with its fiduciary duties and analyze its implications for shareholders, employees, artists, songwriters and other stakeholders.
In a statement, the company said it has “complete confidence” in its strategy and the leadership of Sir Lucian Grainge and the management team. It added that it would have no further comment until it completes its review.
In the first quarter, UMG posted revenue of €2.9 billion, which grew 8.1% on a constant currency basis driven by the consolidation of Downtown Music Holdings, initial pricing benefits of Streaming 2.0 agreements, strong physical sales and healthy synchronization income contributing to growth in its Recorded Music and Music Publishing divisions.
Revenue from subscriptions and streaming grew 10.9% at constant currency to €1.64 billion, while revenue from subscriptions alone climbed 12.5% at constant currency to €1.30 billion. Physical revenue—which includes vinyl sales—jumped 12.7% on a constant currency basis to €310 million. UMG’s top sellers for the quarter included BTS, Olivia Dean, Taylor Swift, the KPop Demon Hunters soundtrack and Morgan Wallen.
UMG shares were down 0.07% on Wednesday, trading at around €19.38 per share. The stock is up 19.8% in the past month, but is down 15.7% in the past six months, 11.7% year to date and 22.5% in the past year.
