Pershing Square Has a History of Investor Activism — But Can It Compel Universal Music to Leave the Netherlands?

Billionaire businessman Bill Ackman’s Pershing Square has a long history of investor activism – but can it compel Universal Music Group to exit the Euronext Amsterdam?

As things stand, the major label appears to maintain that the answer is “no.” We previously explored the multifaceted situation at length, including details pertaining to Pershing Square’s UMG ownership (which currently sits at 10.25% and, for a time years back, was expected to involve a SPAC play), the push for a pivot from the Euronext Amsterdam, and UMG’s response.

“Pershing has the right to request a listing in the US subject to a Pershing entity selling at least $500 million in UMG shares as part of the listing,” Universal Music spelled out in a formal release. “Pershing does not have any right to require UMG to become a US domiciled company or delist from Euronext Amsterdam.”

(In his initial tweet on the subject, Ackman, who’s also pursuing Pershing Square Holdings’ departure from the Euronext Amsterdam, confirmed plans to spearhead Universal Music’s U.S. listing “no later than some time next year” in any event.)

The leading label intends to “endeavor in good faith to comply with its contractual obligations with respect to undertaking the process of a US listing at the request of Pershing,” per the straightforward remarks.

However, any non-contractually-obligated decisions regarding UMG’s country of domicile and more “will be based on an analysis taking into account what is value maximizing and in the best interests of all the shareholders of the company.”

In other words, Universal Music isn’t quite on board at present – though it’s worth reiterating a couple key points on this front.

First, the UMG board member Ackman emphasized the “highly material benefits” of shifting the music company to the States and attributed the business’s stock-price woes in part to its listing status.

“UMG trades at a large discount to its intrinsic value with limited liquidity in significant part due to it not having its primary listing on the @NYSE or @NasdaqExchange and not being eligible for S&P 500 and other index inclusion,” Ackman relayed on X.

We’ve already covered those stock-price woes extensively – referring to a roughly 20% falloff between UMG’s peak over the summer and its present value. Particularly into the new year, it’ll be interesting to see if a possible resolution lies at the intersection of Ackman’s goal and the business’s inherent objective of maximizing shareholder value.

Next, the prior activist-investor maneuvers of Ackman and Pershing Square are insightful.

There’s ample ground to cover here, with a whole lot having changed since the 2000s. But perhaps the most pertinent example can be found in the decades-old spinoff of Tim Hortons from Wendy’s.

“Back then – because we couldn’t get a return phone call,” Ackman explained in a Bloomberg interview. “We were a tiny little fund circa 2004, we hired Blackstone, which had an investment bank at the time. And we hired them to put together a fairness opinion, if you will, of what Wendy’s would be worth if they spun off Tim Hortons.

“And then we wrote a letter to the board, we attached the Blackstone valuation (which was nearly double where the stock was trading). And then six weeks later, magically they spun off Tim Hortons,” he proceeded.

As highlighted, there’s a lot more to chart in this area – with the bigger takeaway being that Ackman and Pershing Square have a track record of successful activist-investor moves. Time will tell whether that track record translates into a big shift (geographical and otherwise) for UMG.