Universal Music shares fell on Thursday after billionaire investor Bill Ackman’s Pershing Square Capital Management sold its remaining stake in the world’s largest music company, ending a five-year investment that is expected to generate profit of at least $600 million.
The disposal involved approximately 80.6 million Universal Music shares valued at more than $1.5 billion, according to a Wall Street Journal report.
The move marks Pershing Square’s complete exit from a company that had been one of its most prominent investments since 2021.
Universal Music shares fell as much as 7.6% in early European trading before trimming some losses.
By mid-morning, the stock was still down about 6%, extending its decline for the year to nearly 20%.
Exit follows rejected takeover proposal
The sale comes only months after Pershing Square’s attempt to acquire Universal Music through a proposed transaction valued at roughly $65 billion was rejected by the company’s board.
Universal said at the time that the offer undervalued the company, which owns the rights to artists including Taylor Swift, Billie Eilish, and Kendrick Lamar.
The proposal also faced opposition from the company’s largest shareholder, France’s Bollore Group.
The Bollore family controls about 18.5% of Universal’s equity and nearly 40% of its voting rights, giving it significant influence over strategic decisions.
Ackman had proposed combining Universal with Pershing Square Sparc Holdings and ultimately pursuing a US listing.
Universal currently trades on Euronext Amsterdam, although it maintains operational headquarters in Santa Monica, California.
Universal repurchases part of its stake
Separately, Universal Music said it repurchased 250 million euros worth of its own shares from Pershing Square under an existing 500 million-euro buyback programme.
The company acquired approximately 0.8% of its outstanding shares at a price of 17.66 euros each, representing an 8% discount to Wednesday’s closing price.
A long and profitable investment
Ackman’s relationship with Universal dates back to 2021, when he initially attempted to purchase a 10% stake through a special purpose acquisition company.
Regulatory concerns ultimately derailed that structure, prompting Pershing Square to acquire the stake directly instead.
The hedge fund purchased shares at an average price of 18.27 euros ahead of Universal’s spin-off from French media group Vivendi.
Over the years, Ackman repeatedly praised Universal Chief Executive Lucian Grainge and argued that the company’s market valuation failed to reflect the strength of its music assets and business model.
Pershing Square had already reduced its position last year, selling about $1.4 billion worth of Universal shares at 26.55 euros each.
Analysts see a negative signal
While the sale was not entirely unexpected following the failed takeover proposal, analysts said the move could still weigh on investor confidence.
ING analysts David Vagman and Maxime Stranart said Pershing’s departure carried symbolic significance because of Ackman’s long-standing support for the company.
“While Pershing’s move isn’t a surprise after Universal Music rejected its offer, it is bad news for the company nevertheless,” the analysts wrote in a research note.
“The exit by a fan with such high visibility sends a negative signal of its own.”
Despite the market reaction, Pershing Square’s investment in Universal ranks among the firm’s more successful long-term holdings, generating substantial gains even as the music company’s shares have struggled over the past year.
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