Pershing Square Closes Investment Fund
Bill Ackman's Pershing Square Capital Management (PSCM) is closing its investment fund that owned a stake in Universal Music Group and distributing 47 million shares of the music company to the fund's co-investors.
The news came on the same day that Pershing Square Holdings closed-end fund owned by PSCM has announced that it has received regulatory approval to delist from the Amsterdam Stock Exchange Euronext.
Controlled by Pershing Square Holdings, 10.25% of UMG shares were held at the end of 2023, according to UMG's annual report for the year. The 47 million shares that Pershing Square distributes are 2.6% of the issued shares of UMG. After the distribution, the investment company will still retain 140 million shares or 7.6% of UMG, Pershing Square said in a statement Thursday.
UMG Shares Distribution Rationale
“The PSVII Funds have elected to distribute UMG shares to their limited partners rather than cash because we believe UMG shares are materially undervalued at the current share price and the tax-free distribution of the shares allows our limited partners to continue to own UMG shares,” Pershing Square stated.
At the current UMG share price, the PSVII distribution costs approximately €1.14 billion euro (US$1.17 billion), and Pershing Square's remaining stake in UMG is valued at approximately €3.395 billion.
Pershing Square acquired a 10% stake in UMG in the summer of 2021 through a series of transactions. The investment company stated that the PSVII funds that purchased UMG at 18.28 euros per share received dividends amounting to 1.66 euros per share over nearly four years of investment.
“The PSVII Funds have elected to distribute UMG shares to their limited partners rather than cash because we believe UMG shares are materially undervalued at their current price.”
Pershing Square
At UMG’s closing price of 24.72 euros on December 31, 2024, the record major achieved a total return of 46%, including dividends during that time, Pershing Square said.
“This return compares favorably with the S&P 500 Index’s 37% returns and the returns of the Amsterdam Exchange Index’s 21% for the same period,” the company noted.
Plans for Delisting and Future Moves
Meanwhile, the company announced that it had received the green light to delist Pershing Square Holdings from Amsterdam's Euronext exchange, the same exchange on which UMG shares are traded, later this month. Pershing Square announced on Thursday that its last day of trading on the Amsterdam exchange will be Jan. 30 and it will be delisted on the same day.
Shareholders will still be able to trade their shares on the London Stock Exchange (LSE), the company said.
Ackman's decision to remove Pershing Square from the Amsterdam exchange followed violence in the city during a match between local football club Ajax and Maccabi Tel Aviv in November. Israeli visitors and Jews were reportedly attacked in the streets in what some called a pogrom.
Ackman, an ardent supporter of Israel, said in a message on X in November that the violence in Amsterdam was a “tipping point” for the decision to delist from the city’s stock exchange.
“Concentrating listing on one exchange, the LSE, and leaving a jurisdiction that fails to protect its tourists and minorities combines both good business and moral principles. We can also save money and improve liquidity for shareholders,” Ackman wrote.
Ackman is also pushing for Universal Music Group to move from the Amsterdam exchange to the New York exchange, arguing that the move would bring “highly material benefits” to UMG investors and asserting that Pershing Square has the “contractual right to ensure UMG’s U.S. listing.”
However, UMG appears to be resisting Ackman's proposal, contending that Ackman has the right to demand, but not order, the company to list in the US.
Pershing Square Capital Management was valued at approximately US dollars 10 billion dollars earlier this year, following a group of investment firms acquiring a 10% share in the company.
Following this blockbuster deal, excitement grew around the opening of Ackman's new office, Pershing Square USA, headquartered in the United States. However, after sharply cutting the investment startup's IPO target price, Ackman pulled out of Pershing Square USA's IPO last summer, citing investor uncertainty.
