Universal Music Group, the entertainment giant behind acts such as Taylor Swift, Sabrina Carpenter, and Kendrick Lamar, has received a takeover offer estimated to be worth $64.3 billion (£48 billion).
US investment company Pershing Square is offering to buy Universal in a merger that would see the new company listed in America, its billionaire chief executive Bill Ackman said.
As well as representing a vast roster of artists, the world's largest music company also runs Abbey Road studios and owns well-known labels such as EMI and Island Records.
Pershing Square, already a stakeholder in Universal, also possesses investments in tech giants like Google, Meta, and Amazon.
Universal has yet to respond to the takeover offer.
Ackman praised Universal's management for their efforts in curating a world-class artist roster and achieving strong business performance, stating that the company had effectively reshaped the industry to prioritize artists while navigating growth challenges related to artificial intelligence and intellectual property protection.
Despite these successes, Ackman noted that Universal's stock price has underperformed due to factors unrelated to its music operations that could potentially be rectified through this acquisition.
Dan Coatsworth, head of markets at AJ Bell, remarked that while Universal seems like a profitable entity, the complexities involved suggest otherwise. He highlighted that the streaming market's growth has been slower than anticipated, which is crucial given that Universal relies heavily on platforms like Spotify and Apple Music for revenue.
In a letter addressed to Universal's board, Ackman emphasized the company's dramatic underperformance regarding major stock indexes and pointed to uncertainties surrounding the 18% stake held in Universal by Bolloré Group, owned by billionaire Vincent Bolloré, as a contributing issue.
Currently, Universal is listed in Amsterdam, but Ackman has long advocated for its shares to be traded in the US.
Following the announcement of the takeover bid, Universal's share price initially surged by nearly 30%, ultimately closing 10% higher.
Ackman's history as a prominent supporter of Donald Trump adds an intriguing layer to his business dealings, further solidifying his influence in both corporate and political spheres.
