Music giant Universal gets $64bn takeover offer

Music giant Universal gets $64bn takeover offer

Universal Music Group, the entertainment powerhouse managing stars like Taylor Swift, Sabrina Carpenter, and Kendrick Lamar, has been approached with a $64.3bn (£48bn) proposal for acquisition. The deal, spearheaded by US-based Pershing Square, would merge the company with another entity under a new American listing, according to CEO Bill Ackman. The group operates Abbey Road Studios and controls prominent labels such as EMI and Island Records, while Pershing Square’s portfolio also includes stakes in tech giants like Google and Meta, alongside Restaurant Brands International, which owns Burger King.

Universal has confirmed receipt of Pershing Square’s proposal, stating it will evaluate the potential impact on stakeholders, including shareholders, artists, and employees. The board has reaffirmed its trust in CEO Sir Lucian Grainge and his leadership, despite Ackman’s assertion that the company’s stock has underperformed relative to major indices. He highlighted the management’s success in cultivating a top-tier artist lineup and maintaining strong financial results, but noted the stock price has stagnated due to external factors not tied to the music business’s performance.

“On paper, you might think it’s a money-making machine. In reality, it’s not that simple,” remarked Dan Coatsworth, markets head at AJ Bell. He emphasized Universal’s status as home to nine of the top 10 global recording artists in 2025, yet pointed to slower-than-anticipated growth in streaming markets. Coatsworth argued that this trend is critical, as Universal depends heavily on platforms like Spotify and Apple Music for royalty revenue.

Recent debates have centered on the royalties paid by streaming services, with Universal facing scrutiny over their payment rates. The company is also contending with the rise of AI-generated deepfakes, which mimic artists’ voices and styles, flooding platforms with counterfeit content. Ackman’s letter to the board criticized Universal’s performance, citing uncertainties surrounding Bolloré Group’s 18% stake and the decision to delay a New York Stock Exchange listing. Currently listed in Amsterdam, the company has long been a target for US market entry under Ackman’s advocacy.

Universal’s share price surged nearly 30% following the offer’s announcement, though it later stabilized at a 10% increase. The shift in revenue models, driven by platforms like TikTok and Instagram, has reshaped the industry. In 2024, Universal threatened to remove its songs from TikTok, alleging unfair compensation and concerns about AI’s influence on online safety. Coatsworth linked this dispute to broader tensions over how social media networks compensate creators, adding that fierce competition demands heavy investment in marketing to maintain visibility.