UMG Selling Half Of Its Spotify Stake
• Universal Music Group (UMG) announced Wednesday it would sell off half of its equity stake in Spotify and double its share buyback program totaling approximately $1.17 billion.
As Reuters reports, UMG said proceeds from the stake reduction would be used for the buyback and also to be shared with artists.
The move comes three weeks after activist investor Bill Ackman and his Pershing Square Capital Management made an unsolicited $64 billion bid for UMG, arguing the market was not fully valuing its 2.7 billion-euro ($3.1 billion U.S.) Spotify stake. Ackman proposed selling UMG’s entire Spotify holding and using 1.5 billion euros ($1.7 billion U.S.) of the proceeds as part of the takeover’s cash consideration.
UMG’s board has now moved independently, approving a sale on its own terms rather than returning the proceeds directly to shareholders, as Ackman had advocated.
The decision allows UMG to honor its “Taylor Swift clause” — a commitment made in 2018 when the pop star re-signed with the label on the condition that any proceeds from a Spotify stake sale would be shared with all artists on a non-recoupable basis.
UMG said it also planned to launch an additional 500 million euro ($584 million U.S.) share buyback, subject to shareholder approval at its annual general meeting, doubling its total buyback authorization.
