Bill Ackman explains $ 4 billion stake in Universal Music as obvious
In a nearly three-hour presentation on Wednesday morning, Pershing Square Capital founder Bill Ackman made it clear his love for the music business – and the reasons he set his sights on Universal Music Group. , stating, “I can’t think of one asset that I’m more confident of being consumed over time.… You need food and water to live, but music comes next.
Given his choice between all of these basic necessities, Ackman made his preference clear, adding that “you can’t allow intellectual property in food and water.”
Ackman’s comments were webcast for Pershing Square shareholders, in which he explained why he spent $ 4 billion to get 10% of UMG, the world’s largest music company. , making the investment a good deal.
Other Pershing Square executives participating in the webcast said they would have preferred to buy up to half the company – and, perhaps more realistically, made an initial request for a 17.5% share – but Vivendi, the parent company of UMG, cited tax reasons for only being able to sell 10%.
“The best analogy we can make here is what happened to software, and some of the world’s most beloved companies are software companies,” Ackman said at the meeting, according to the the Wall Street newspaper. “I am convinced that in 25 years, 50 years, 100 years, Universal will be very high on the list of big companies.”
Ackman noted that UMG rose 5% during the pandemic, which he described as “the worst thing that can happen in music,” proving, in his reasoning, that music is recession-proof. . He cited UMG’s 31% share of global consumption and the relative lack of debt as additional attractions for the property.
UMG CEO Lucian Grainge was showered with praise during the presentation, with Ackman comparing him to the most ‘iconic’ business leaders in history, including Walt Disney, Steve Jobs and Reed Hastings.
In a deal that closed on Sunday after seven months of negotiations, Pershing Square finally recovered 184.8 million shares, before Universal’s IPO in September on the Euronext Amsterdam stock exchange.
Pershing Square predicted that 67% of smartphone users would subscribe to paid streaming services by 2030, roughly doubling the percentage of subscribers – 34% – at the start of the decade. Citing Universal’s dominance, with no music consumption platform that can survive without making a deal with the company, Ackman said that in essence, “if you own UMG, you own a royalty on the people who listen to it. music”.
Ackman reiterated that music in general and UMG in particular is personal to him, citing a Sting record as the first he has ever purchased, and how his songwriter grandfather, Herman Ackman, wrote hit songs. in the 1920s whose main recordings are now owned by Universal.