One Man Can Kill Bill Ackman’s $64 Billion Bid for Universal Music Group— and No One Knows What He’ll Do

The music industry’s biggest deal in years has triggered a high-stakes game of musical chairs, with billionaire activist investor Bill Ackman making a bold bid to acquire Universal Music Group (UMG). The proposal involves a merger between UMG and Ackman’s special purpose acquisition company, which would create a new entity with a $64 billion equity value. However, the deal faces significant hurdles, not least of which is the opposition from Vincent Bolloré, UMG’s controlling stakeholder.

Bolloré’s influence over UMG stems from his 28% stake in the company, giving him effective veto power over any deal. His reputation for unpredictability should serve as a warning to Ackman and his team: they must be prepared for anything when dealing with Bolloré. Nicolas Marmurek, a London-based analyst, noted that “nine times out of 10 when people are speculating about what Bolloré will do, they get it wrong.” This is a sobering reminder of the complexities involved in navigating UMG’s web of interests and alliances.

Ackman’s proposal goes beyond mere control; it’s an attempt to reshape the music industry. As streaming continues to revolutionize how we consume music, deep catalogs like Universal’s have become increasingly valuable. Ackman’s vision for transforming Pershing Square Capital Management into a diversified holding company is built around this reality: UMG’s catalog has intrinsic value that extends beyond its current assets.

The trend of older music continuing to generate revenue – as seen in the resurgence of Kate Bush’s “Running Up That Hill” following its use in Stranger Things – is a testament to this phenomenon. Tom Toumazis, a global senior advisor at AlixPartners, described it as an “intrinsic reset over a decade that says, ‘This music just keeps on going, and keeps on going, and keeps on going.’” Ackman’s investment thesis relies heavily on the idea that UMG’s catalog has long-term growth potential.

However, Bolloré’s past behavior suggests he will not be easily swayed. When Pershing Square first acquired a 10% stake in UMG in 2021, it was with the goal of listing the company’s shares in New York – a move that Bolloré ultimately blocked. Ackman’s decision to leave UMG’s board last year should serve as a warning sign: even with significant investment and influence, Pershing Square’s efforts were ultimately rebuffed.

As the music industry waits for Bolloré’s next move, one thing is certain: Ackman will need all his guile and charm to outwit the French billionaire. But can he succeed where others have failed? The clock is ticking – and only time will tell if Ackman’s bid will become a reality or fall victim to the complex web of interests surrounding UMG.