Bill Ackman Proposes Merger To Take Universal Music Group To NYSE In $33B Deal

Bill Ackman’s letter to Universal Music Group N.V.’s broad of directors.

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The Board of Directors

Universal Music Group N.V.

2220 Colorado Avenue, Santa Monica, California

‘s-Gravelandseweg 80, 1217 EW, Hilversum, Netherlands

Dear Members of the Board,

Four and a half years ago, in a privately negotiated transaction with Vivendi, we acquired 10% of Universal Music Group N.V. (“UMG” or the “company”) just prior to its Euronext Amsterdam listing, and thereafter presented our case (link) to investors as to why it is a great company. We said then, and we believe even more so today, that UMG is best understood as a high-quality, capital-light royalty on the long-term growth of global music in which streaming penetration and appropriate price increases support long-term, high-single-digit revenue growth for the next decade and likely thereafter.

Since UMG’s listing on Euronext Amsterdam, Sir Lucian Grainge and management have done an excellent job nurturing and continuing to build a world-class artist roster, signing new DSP agreements that will lead to accelerated revenue growth, reshaping the industry through an artist-centric model, and demonstrating the company’s ability to harness growth opportunities from AI while also protecting the company’s and its artists’ intellectual property.

As a result of its strong business and strategic execution, UMG has grown revenues and Adjusted EBITDA by 11% and 13% annually, exceeding our original projections. UMG is expected to generate accelerated growth beginning this calendar year with the benefit of wholesale price increases, while music remains the lowest cost form of media entertainment.

While business performance has been strong, UMG’s share price has languished. Since the public listing in September 2021, revenues and Adjusted EBITDA have grown 60% and 70% respectively, while UMG’s share price has declined 23% from its €25.10 closing price on the first day of its Euronext listing. UMG stock has dramatically underperformed the MSCI World Index and S&P 500 indices, which have increased by 55% and 61% over the same period, representing approximately 7,800 and 8,400 basis points, respectively, of underperformance.1