Common Music Group (UMG), the world’s largest label conglomerate, is planning a U.S. inventory market itemizing within the close to future, along with its present itemizing in Amsterdam. However is it a case of “Shake It Off,” to cite UMG star Taylor Swift, or a case of a “Good Duet,” to quote fellow UMG artist Ed Sheeran?
Wall Avenue analysts and traders will preserve their eyes and ears open for attainable updates from the UMG administration workforce, led by chairman and CEO Lucian Grainge, in July 31’s newest earnings report or the next earnings convention name. For those who’re sorting by way of the main points of what’s going on with the anticipated further inventory market itemizing, The Hollywood Reporter has just a few solutions on the who, why, when, and the place.
Who’s driving the U.S. itemizing and why?
Billionaire hedge fund supervisor and large UMG investor Invoice Ackman first mentioned in November that he needs to deliver UMG shares to america, citing each monetary and political elements.
Let’s begin with the latter. In an X submit late final 12 months, Ackman talked about “occasions in Amsterdam over the past 24 hours.” That was a reference to Israeli soccer followers who had been overwhelmed and injured in clashes in Amsterdam following a Europa League soccer match match between Israeli membership Maccabi Tel Aviv and Dutch facet Ajax Amsterdam. The next morning, authorities mentioned 5 injured Israeli soccer followers had been launched from the hospital, with 20-30 further folks having been frivolously injured. In complete, 63 people had been arrested, police mentioned on the time.
Ackman, who’s Jewish, vowed to hunt approval from the board of his Pershing Sq. Holdings, wherein he and his household personal a 23 p.c stake, “to remove its itemizing on the Euronext Amsterdam trade” to give attention to its second itemizing on the London Inventory Alternate (LSE). “Concentrating the itemizing on one trade, the LSE, and leaving a jurisdiction that fails to guard its vacationers and minority populations combines each good enterprise and ethical rules,” he defined. “We will additionally get monetary savings and enhance liquidity for shareholders in addition.”
The investor additional signaled comparable plans for UMG, writing: “I’ve additionally begun the dialog with UMG (on whose board I sit), which is domiciled in Amsterdam in addition to listed there, about shifting its domicile and its itemizing to america, which is able to supply comparable in addition to different extremely materials advantages.”
Added Ackman: “Pershing Sq. has a contractual proper to trigger UMG to be listed within the US. We are going to train this proper.”
He then outlined the monetary rationale for the transfer additional. “UMG trades at a big low cost to its intrinsic worth with restricted liquidity in vital half attributable to it not having its major itemizing on the New York Inventory Alternate (NYSE) or Nasdaq Alternate and never being eligible for S&P 500 and different index inclusion,” Ackman highlighted. “We’re going to repair this.”
UMG, in a response, emphasised that “Pershing doesn’t have any proper to require UMG to grow to be a U.S.-domiciled firm or delist from Euronext Amsterdam.” Nevertheless it acknowledged that Ackman has the fitting to request a further U.S. itemizing.
The corporate has not detailed up to now what number of shares it’s going to supply within the U.S. itemizing or at what worth, however highlighted that it’ll not obtain any proceeds from the sale of shares by promoting shareholders.
On July 21, UMG mentioned that it has “confidentially submitted a draft registration assertion … to the U.S. Securities and Alternate Fee regarding a proposed public providing in america of the corporate’s atypical shares held by sure shareholders,” reemphasizing: “The variety of atypical shares to be supplied and the worth vary for the proposed providing haven’t but been decided.”
Nonetheless, the corporate has confirmed that Pershing has the fitting to request a U.S. itemizing “topic to a Pershing entity promoting at the least $500 million in UMG shares as a part of the itemizing.”
Monetary consultants see the economic logic behind a U.S. itemizing. U.S. fairness capital markets are referred to as the most important and most liquid on the earth. In spite of everything, firms listed within the nation are usually lined by a variety of analysts with a broad investor following. Accessing this liquidity by way of a list is usually seen as a possibility to spice up shareholder worth.
When and the place is the U.S. inventory itemizing anticipated?
The timing and site of a UMG U.S. inventory market itemizing are nonetheless unknown.
“We are going to train this proper and obtain a U.S. itemizing for UMG no later than a while subsequent 12 months,” Ackman promised late in 2024.
The music main has been working inside that timeframe. “UMG will use commercially affordable efforts to launch an underwritten providing for the sale of sure shares owned by Pershing by Sept. 15, 2025, topic to regulatory approval and market circumstances,” the corporate mentioned earlier this 12 months.
Nevertheless it additionally emphasised: “Any actions or selections of UMG past these essential to comply with its contractual obligations underneath the Registration Rights Settlement shall be decided by the board of administrators of UMG primarily based on an evaluation taking into consideration what’s worth maximizing and in the most effective pursuits of all of the shareholders of UMG.”
By way of the place the inventory could be listed, the reply can be not clear but, however the two huge names to determine between are the Nasdaq and the NYSE.
An Analyst’s View
Count on Wall Avenue analysts to weigh in on the U.S. itemizing plan extra broadly as soon as extra particulars emerge. TD Cowen analyst Doug Creutz shared a few of his ideas in a report early this 12 months.
“Pershing is required to promote at the least $500 million of its $3.4 billion possession place (about 7.5 p.c stake),” he highlighted. “Whereas the entry of latest shares into the market is generally an overhang, we expect that the widening of the potential investor base from a U.S. itemizing shall be greater than an offset for share efficiency.”
Concluded Creutz: “The U.S. itemizing is predicted to enhance liquidity for the inventory and permit traders restricted to buying shares in U.S.-listed firms so as to add UMG to their portfolios.”