Universal Music Rebuffs Ackman Bid, Citing Undervaluation

What Pershing Square offered, and why UMG said no

Pershing Square's approach, confirmed on 29 May 2026, was rebuffed by UMG's board on the grounds that it failed to reflect the company's intrinsic worth, according to the BBC's report. UMG described the offer as one that "fundamentally undervalued" the business.

Specific financial terms of the bid have not been publicly disclosed. However, UMG's Amsterdam-listed shares have traded at a market capitalisation in the region of €45–50 billion in recent months, underpinned by full-year 2025 revenues that exceeded €11 billion and adjusted EBITDA margins that have steadily climbed past 20%, according to the company's prior earnings releases. Any bid pitched materially below those levels would face resistance from a board that views streaming-era growth as durable rather than cyclical.

Bill Ackman, the founder and chief executive of Pershing Square, is no stranger to UMG. In 2021, his blank-cheque vehicle Pershing Square Tontine Holdings attempted to acquire roughly 10% of UMG in a SPAC-adjacent structure valued at approximately $4 billion. That transaction was ultimately unwound after regulatory and structural objections, but Ackman retained a personal stake and has repeatedly articulated a bullish thesis on music-streaming economics, arguing that catalogue owners benefit from a compounding, inflation-resistant revenue stream.

The rejection suggests UMG's board believes the public market has not yet fully priced that compounding effect, let alone that a private buyer should capture it at a discount.

How boards value IP-rich recurring revenue

The core disagreement between Pershing Square and UMG's board is one that recurs across every sector built on intellectual property: what multiple should apply to revenues that are contractual, recurring, and growing?

For music catalogues specifically, the economics have shifted markedly since the streaming era began. Revenue from recorded music globally reached $28.6 billion in 2023, according to the IFPI's Global Music Report, with streaming accounting for 67% of the total. Growth has been driven not only by subscriber additions on platforms such as Spotify, Apple Music, and YouTube Music but also by price increases; Spotify raised its individual premium tier by $1–2 per month across major markets in 2023 and again in 2024, according to the company's own announcements.

For a rights-holder like UMG, which controls catalogues spanning The Beatles, Taylor Swift, Drake, and Billie Eilish, each price rise flows almost directly to the top line without a corresponding increase in cost. That operating characteristic, high incremental margins on a growing base, is what makes catalogue owners attractive to financial buyers. It is also what makes boards reluctant to sell at multiples derived from historical earnings rather than forward projections.

UMG's board appears to have concluded that Ackman's offer reflected a financial buyer's discount rate rather than the operating value of the asset. In practical terms, that means the board believes the net present value of future streaming royalties, synchronisation fees, and neighbouring-rights income exceeds whatever headline premium Pershing Square was prepared to pay.

Music-catalogue deal benchmarks in 2025–26

UMG's stance does not exist in isolation. The market for music-rights assets has produced a series of reference points over the past three years, and valuations have broadly moved upward.

Hipgnosis Songs Fund (LSE: SONG), the London-listed vehicle that amassed a portfolio of over 65,000 songs, accepted a takeover by Blackstone-backed Hipgnosis Songs Capital in 2024 at a price that implied a multiple of roughly 18–20 times net publisher's share, according to deal filings at the time. That transaction was itself contentious; several shareholders argued the price was too low given the portfolio's long-term cash-generation potential.

Elsewhere, Concord, the independent music company backed by funds affiliated with Apollo Global Management, has continued acquiring catalogues at multiples reported to be in the mid-to-high teens of annual net revenue, according to Music Business Worldwide. Primary Wave, another active acquirer, has similarly been paying multiples that have crept above 20 times for marquee catalogues.

These benchmarks matter because they establish a floor. If standalone catalogues trade at 18–22 times net revenue, a vertically integrated major like UMG, which also controls distribution, publishing, and artist services, would logically command a premium to that range. UMG's board is, in effect, arguing that Pershing Square's bid did not clear that bar.

Streaming growth rates are central to the calculation. Spotify reported 252 million premium subscribers at the end of Q1 2025, according to its earnings release, up from 220 million a year earlier. Apple Music and YouTube Music do not disclose exact subscriber figures, but estimates from MIDiA Research place the combined global paid-streaming subscriber base above 700 million, with penetration still well below saturation in markets across Asia, Africa, and Latin America. For catalogue owners, each new subscriber represents incremental, largely passive revenue.

Lessons for founder-led businesses weighing unsolicited bids

The UMG episode carries direct relevance for any founder, operator, or board sitting on an IP-heavy or rights-based business.

First, recurring revenue deserves a recurring-revenue multiple. Financial buyers often apply discount rates that reflect their own return hurdles, typically 15–20% internal rates of return for private equity. Operating boards, by contrast, may value the same cash flows at a lower discount rate because they understand the durability of the revenue base. The gap between those two frameworks is where most unsolicited bids land, and where most rejections originate.

Second, sector transaction data is the strongest shield against undervaluation. UMG's board can point to Hipgnosis, Concord, and Primary Wave deals as evidence that the market for music rights supports higher multiples than Pershing Square apparently offered. Any founder weighing an approach should assemble comparable transaction evidence before entering a negotiation.

Third, public-market pricing is not necessarily the ceiling. UMG's rejection implies the board believes its shares are undervalued by the public market as well. For private companies, the equivalent insight is that a trade buyer or strategic partner may pay more than a financial sponsor because they can extract synergies or cross-sell into an existing customer base.

Finally, process matters. UMG's board issued a clear, concise rejection rather than engaging in prolonged public negotiation. For smaller companies, the discipline of responding quickly and definitively to an unsolicited approach, ideally with independent board advice, reduces the risk of distraction and value leakage.

Whether Pershing Square returns with an improved offer remains to be seen. What is already clear is that UMG's board has drawn a line: catalogue-backed, streaming-era businesses are not to be acquired on the cheap.