Pershing Square’s offer to buy Universal Music Group (UMG) has been making headlines, with some reports valuing the deal at $64 billion. However, a closer look at the details reveals that the company’s founder and CEO, Bill Ackman, may be trying to buy the major on the cheap. The cash option, if available for all shares, wouldn’t even be bigger than UMG’s initial public offering. Pershing Square’s valuation is based on a projected value of 30.40 euros ($35) per share on December 31, 2026, which would give the deal a valuation of 55.55 billion euros ($64 billion).
However, if shareholders choose to receive all cash, they will receive 22 euros a share, which would give the deal an overall value of 40.34 billion euros ($43 billion). This valuation is lower than UMG’s valuation after its first day of trading, when it closed at 25.10 euros, giving it a 46 billion euros valuation. Music industry financial executives believe that Ackman is trying to take over UMG on the cheap, or at the very least, ignite UMG share price increases. The non-binding offer will pay shareholders 5.05 euros a share and the equivalent of a 0.77 share in new UMG stock, which would see the share count fall by 17%.
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