Billionaire investor Bill Ackman told a story about his song-writing grandfather that won over Universal Music’s bosses

bill ackman
Bill Ackman.

  • Bill Ackman’s SPAC is close to buying 10% of Universal Music Group for $4 billion.
  • Ackman told a story about his grandfather, a songwriter, to win over UMG’s bosses.
  • UMG executives gifted Ackman two records and the sheet music for his grandfather’s hit song.
  • See more stories on Insider’s business page.

Bill Ackman’s special-purpose acquisition company (SPAC) is close to buying 10% of Universal Music Group for $4 billion. The billionaire investor might have his grandfather’s musical talents to thank if he manages to seal the deal.

The Pershing Square chief began his first meeting with UMG executives by regaling them with a story about Herman Ackman, The Wall Street Journal reported, citing people involved in the transaction.

Ackman’s grandfather wrote a song called “Put Your Arms Where They Belong (For They Belong to Me)” in 1926, which he sold to music-publishing group Tin Pan Alley for $150. The ditty sold more than 750,000 copies, Ackman told the bosses of the world’s biggest music company, according to The Journal.

The UMG executives later discovered that their company owned the elder Ackman’s recording. They dug up two records of the song and the accompanying sheet music, mounted and framed them, and gifted them to Ackman, The Journal reported.

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Vivendi, UMG’s parent company, met with multiple private-equity firms and other investors interested in buying a piece of the division. Ackman’s clear passion for the music business – rooted in his grandfather’s legacy – along with his relationship with management and his vision for growing the company, helped him stand out from the crowd, The Journal said.

Ackman’s SPAC, Pershing Square Tontine Holdings, is the vehicle looking to acquire the UMG stake. PSTH, which joined the stock market last summer, would remain a public company and could have nearly $3 billion to pursue another deal, even if the UMG transaction is successful.

Pershing Square also hopes to launch a new take on SPACs called a SPARC, which won’t lock up investors’ capital while it searches for a deal, and won’t have the pressure to close a deal within two years. Ackman’s proposed SPARC would be armed with up to $11 billion to pursue a business combination.

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Billionaire investor Bill Ackman’s SPAC is close to striking a deal with Universal Music, report says

bill ackman
Bill Ackman

  • Bill Ackman’s SPAC is close to striking a deal with Universal Music, The Wall Street Journal said.
  • Pershing Square Tontine Holdings could agree a transaction valuing the music group at $40 billion.
  • Universal Music, a division of Vivendi, racked up $9 billion in revenue last year.
  • See more stories on Insider’s business page.

Billionaire investor Bill Ackman’s special-purpose acquisition company (SPAC) is close to agreeing a transaction with Universal Music Group that would value the music titan at $40 billion, The Wall Street Journal reported on Thursday, citing people familiar with the matter.

Ackman’s Pershing Square Tontine Holdings might finalize the megadeal in a matter of weeks, although it could still fall through, sources told The Journal. PSTH shares fell as much as 8% in aftermarket trading after the news broke.

Universal Music, which represents artists including Taylor Swift and Billie Eilish, is currently owned by Vivendi, a French media conglomerate. The segment grew constant-currency revenue by 5% to 7.4 billion euros ($9 billion) last year, and operating income by 20% to 1.4 billion euros, Vivendi’s latest annual report shows.

Vivendi disclosed in mid-May that it was considering selling 10% of Universal Music to an “American investor” – which may be Ackman – or pursuing a public offering of 5% to 10% of the segment’s shares. Tencent, a Chinese technology conglomerate, doubled its stake in Universal Music to 20% last year, valuing the business at 30 billion euros.

Ackman, the boss of Pershing Square Capital Management, said last month that his team had identified an “iconic, phenomenal, great business” back in November 2020, and he hoped to strike a deal to purchase a piece of it within the next few weeks. He said the target was so attractive and interesting that it was “worth the energy and the effort.”

The hedge fund manager took PSTH public last summer with the goal of spending around $5 billion for a minority stake in a private business. Ackman’s reputation as a top investor – boosted by his lucrative pandemic hedge and his fund’s 70% gain last year – and the size of his SPAC prompted intense speculation about his possible target.

Pershing Square Capital Management declined a request for comment from Insider.

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