Universal Music Group, the entertainment giant behind acts such as Taylor Swift, Sabrina Carpenter, and Kendrick Lamar, has received a takeover offer estimated to be worth $64.3 billion (£48 billion).
US investment company Pershing Square is offering to buy Universal in a merger that would see the new company listed in America, its billionaire chief executive Bill Ackman said.
As well as representing a huge list of artists, the world's largest music company also runs Abbey Road studios and owns labels such as EMI and Island Records.
Pershing Square, which already owns a stake in Universal, also has holdings in Google, Meta and Amazon, as well as Restaurant Brands International, which includes Burger King.
Universal is yet to respond to the offer.
Ackman commented on the company’s management, saying they had done an excellent job nurturing and continuing to build a world-class artist roster and generating strong business performance. He pointed out that Universal has adapted to industry changes, particularly in using artificial intelligence effectively while safeguarding intellectual property.
However, Ackman noted that Universal's stock price had languished due to factors unrelated to its music performance, suggesting this transaction could address those issues.
Dan Coatsworth, head of markets at AJ Bell, stated, On paper, you might think it is a money-making machine. In reality, it's not that simple. He explained that even with many top recording artists, Universal's growth has been slow due to dependence on streaming royalties from platforms like Spotify and Apple Music.
Ackman has urged the need for Universal to transition its listing to the US stock exchange, where it might regain value and visibility, as it currently trades in Amsterdam. He believes that certainty around its shares can drive performance and bolster investor confidence.
Initially after the offer, Universal's shares soared nearly 30%, reflecting the market's positive reception. Yet, challenges remain for the wider music industry, particularly with shifts in revenue streams as audiences migrate to platforms like TikTok.
