Bill Ackman’s quest to own Amsterdam-quoted Universal Music Group (UMG) will be a hard sell despite the sharp rise in the EMI owner’s share price.
The structure of the proposed £48billion deal is complex, as befits Ackman’s Pershing fund.
Universal’s share register is dominated by big blocs with France’s Vincent Bolloré controlling 18.4 per cent, the media outfit Vivendi 13.4 per cent, China’s Tencent 11.4 per cent and Ackman well down the list with 4.7 per cent.
We should not underestimate the importance of any deal to acquire UMG to Britain’s creative industries.
Among the recording artists on its vinyl and other music formats, including streaming, are Adele, Dua Lipa, Coldplay, Elton John and the Beatles.
The list is formidable and carefully cultivated by Britain’s own Sir Lucian Grainge from headquarters in Santa Monica.
On song: Pershing founder Bill Ackman, pictured, has launched a £48bn bid for Universal Music Group
Grainge had until now been planning to bring the enterprise to the New York Stock Exchange but has been constrained by a weak share price.
The threat of AI hangs over the music industry like the Sword of Damocles in much the same way as streaming and Spotify were once seen as an existential threat.
UMG’s Amsterdam share quote was never ideal because of limited liquidity and little direct connection to the performers behind the label.
Grainge told me at the time of the flotation he would have preferred his native London or New York.
His hand was forced by the big French investors. Pershing’s offer would bring Universal Music to New York and what Ackman would claim was a safer home.
Known as a mercurial hedge fund trader, Ackman is enormously influential. His intervention, at the time of the Trump tariff mayhem a year ago, is credited with bringing order to a chaotic process.
More recently Ackman has signalled that he wants to be the next Warren Buffett. The Oracle of Omaha always maintained an interest in unsung, great companies. Arguably UMG shares, which have stagnated close to its float price, are just that.
When UK private equity pioneer Guy Hands bought EMI on the eve of the Great Financial Crisis for £4billion (including debt), he was indulging his love of British rock.
The foolishness of a highly leveraged deal, which fell apart, led to the dismemberment of music production and distribution in Britain.
EMI largely was saved from oblivion by Grainge. Despite creative riches the UK surrendered control over a cultural icon.
Now the songbook is on the road again. The nation’s music industry is a bystander in a battle with an unpredictable outcome.
Senior surrender
Selling Senior, a supplier of high-tech systems to the defence and aerospace industries during conflict in the Gulf, looks very careless.
Chairman Ian King saw off an initial bid from Advent, the destroyers of Cobham, and has managed to win a superior deal for shareholders of £1.4billion.
But allowing a UK defence tech company to disappear into Blackstone, not known for careful stewardship of British assets, is a profound error.
Once in private equity hands the future for Senior, its workforce, suppliers and the national interest will be decided behind closed doors.
King has form on this. As chief executive of BAE Systems he sought to merge Britain’s defence champion with Airbus.
It was a disaster averted by the German government and once-venerated investor Neil Woodford.
A gutsy government would draw a line in the sand, invoke the neglected National Security and Investment Act, and kill the transaction. So far Labour has shown no inclination to do so.
SpaceX rescue
Edinburgh Worldwide Investment Trust is doing its best to ensure that its valuable stake in aerospace group SpaceX does not fall into the hands of American intruder Boaz Weinstein and his Saba fund.
Its latest appeal to retail investors to vote for its tender offer is a noble effort. However, Chairman Jonathan Simpson-Dent and his board should have been braver.
Having seen off Saba twice before, it should have fought off the raider’s back door takeover attempt at this Friday’s AGM.
Demanding that shareholders vote for an escape route smells of defeatism.
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