Hedge fund manager Bill Ackman’s Pershing Square Capital Management LP is pushing Universal Music Group NV (UMGNF) (DE:0VD) (GB:0UMG) to opt for a secondary listing in the U.S. The move comes as part of a Registration Rights Agreement between UMG and Pershing Square.
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UMG’s original listing and domicile is in Amsterdam. The music conglomerate said that it will use reasonable efforts to launch an underwriting offering for the sale of shares owned by Pershing Square. UMG has until September 15, 2025, to fulfill the agreement. Pershing Square has waived the 120-day filing requirement for this listing. Meanwhile, UMG said that Pershing Square only has the right to request a dual listing, not a domicile change, and all further actions would be based on the board’s decisions.
Know More About Ackman’s Push for a U.S. Listing
As part of the agreement, Pershing Square is required to sell at least $500 million worth of Universal Music Group shares it owns for the U.S. listing. As of date, Pershing Square has around 7.6% stake in UMG, with the total investment valued at $3.3 billion, Ackman said in an X post yesterday.
Ackman first floated this idea, along with shifting both Pershing Square and UMG’s domicile to the U.S., in November last year. Pershing Square had also asked UMG to delist from Euronext, a step that UMG outrightly refused. This was followed by a sharp cutting of the UMG stake by Pershing Square. Ackman’s decision to shift Pershing and UMG from Amsterdam was a result of violent attacks on Israeli soccer fans in the country in November. Pershing Square is in the process of shifting its Amsterdam listing to the U.S. Effective January 31, its stock will stop trading on the Euronext Amsterdam exchange.
The rationale behind Ackman’s request for a U.S. listing stems from the fact that it will drastically improve the demand and value of UMG shares. Plus, a U.S. listing would enhance analyst coverage of the company and improve liquidity. A dual listing usually improves the visibility and demand for the company’s shares from investors across nations and hedge funds. Additionally, it protects the company from any unusual rule or policy changes undertaken in any one country.
Is Universal Music Group a Buy or Sell?
Analysts remain divided on Universal Music Group’s stock trajectory. On TipRanks, UMGNF stock has a Moderate Buy consensus rating based on three Buys and four Hold ratings. Also, the average Universal Music Group price target of $27.90 implies 12.1% upside potential from current levels. In the past year, UMGNF shares have lost 13.3%.
