Music giant Universal gets $64bn takeover offer

Universal Music Group Eyes $64.3bn Takeover by Pershing Square

Universal Music Group, a leading entertainment entity known for managing iconic artists like Taylor Swift, Sabrina Carpenter, and Kendrick Lamar, has been approached with a potential acquisition valued at $64.3 billion (£48 billion). The proposal comes from US-based Pershing Square, a firm helmed by billionaire Bill Ackman, who stated that the merger would result in a new entity listed on American markets. Beyond its roster of musicians, the company operates Abbey Road Studios and oversees major labels such as EMI and Island Records.

Pershing Square already holds a portion of Universal’s shares and has investments in other major corporations, including Google, Meta, Amazon, and Restaurant Brands International, which encompasses Burger King. Ackman emphasized that the takeover could resolve ongoing challenges, noting the company’s stock price had stagnated despite its strong performance in the music sector. Universal confirmed it would evaluate the proposal’s impact on stakeholders, including employees and creators, while reaffirming its trust in CEO Sir Lucian Grainge and his leadership.

Industry Shifts and Strategic Concerns

Ackman highlighted Universal’s efforts to adapt to evolving technologies, such as artificial intelligence, while safeguarding intellectual property. However, he argued that these achievements were overshadowed by external factors, including the uncertainty surrounding Bolloré Group’s 18% ownership stake and the delay in Universal’s New York Stock Exchange listing. The company is currently traded on the Amsterdam Stock Exchange, a move Ackman has consistently advocated for a US-based flotation.

“On paper, you might think it’s a money-making machine. In reality, it’s not that simple,” said Dan Coatsworth, markets expert at AJ Bell. He noted that while Universal houses nine of the top ten global artists of 2025, growth in the streaming market has fallen short of expectations. This matters because the company heavily depends on platforms like Spotify and Apple Music for royalty income, which has become a contentious topic in the industry.

Global music revenues have grown steadily since the rise of streaming services revived the sector after years of decline due to piracy. Yet, a persistent discussion revolves around the royalties these platforms distribute. Additionally, the proliferation of AI-generated deepfakes—fake songs mimicking artists—has added to the industry’s challenges. In a letter to the board, Ackman claimed Universal’s stock had underperformed compared to key US and international indexes, citing strategic missteps as the cause.

Universal’s share price initially surged by nearly 30% following the takeover announcement, later settling at a 10% increase. The company’s recent standoff with TikTok, where it threatened to remove its tracks from the platform over royalty disputes, underscores broader tensions with social media networks. Coatsworth pointed out that Universal’s reliance on platforms like TikTok and Instagram has altered revenue models, requiring heavy investment in marketing to keep artists competitive. “Cut-throat competition in the music industry doesn’t help,” he remarked, adding that constant spending is essential for Universal to sustain profitability.

Ackman’s Political Influence

Ackman’s endorsement of Donald Trump during his 2024 re-election campaign signaled his growing influence in the business world. His push for Universal’s US listing, which was postponed, reflects his belief in reshaping the company’s financial trajectory. Despite these efforts, the debate over fair compensation from streaming services remains unresolved, with Universal’s actions highlighting concerns about how digital platforms remunerate creators.