Pershing Square Capital Management Completes UMG Stock Distribution

Pershing Square Capital Management Concludes PSVII Funds

Pershing Square Capital Management, L.P. has proudly announced the successful conclusion of its PSVII funds. These funds were established as finite-life co-investment vehicles devised to manage investments in Universal Music Group N.V. (UMG). The PSVII funds played a pivotal role in connection with Pershing Square’s earlier acquisition of shares from Vivendi.

Significant Share Distribution to Limited Partners

In a strategic move, the PSVII funds chose to distribute shares of UMG to their limited partners instead of opting for cash. This decision stems from the belief that UMG’s stock is currently undervalued, providing an opportunity for continued ownership of these shares through a tax-free distribution. This distribution involves approximately 47 million shares, representing 2.6% of UMG, reaching non-Pershing Square affiliated investors.

Investment Holders

Pershing Square itself maintains a substantial stake in UMG, holding around 140 million shares, which equates to 7.6% of the total company shares. These shares are primarily owned by core funds, including Pershing Square Holdings, Ltd. and Pershing Square International, Ltd., alongside Bill Ackman and other employees affiliated with Pershing Square.

Long-term Investment Perspective

Pershing Square continues to express confidence in UMG as a long-term investment. Neither Pershing Square, nor Bill Ackman, nor their affiliates plan to sell any shares in conjunction with this distribution. UMG consistently stands as the largest asset within the Pershing Square funds portfolio.

Strategic Acquisitions and Performance

The collaborative efforts of the Pershing Square core funds and the PSVII funds facilitated the acquisition of a notable 10% stake in UMG directly from Vivendi during a negotiated transaction. This investment was executed at an initial price of €18.28 per share. Since the inception of the investment, the PSVII funds have collected dividends amounting to €1.66 per share. With UMG’s closing price at €24.72, UMG has achieved an impressive total return of 46%, factoring in dividends, over approximately three years.

Comparison with Market Indices

This remarkable return notably surpasses that of the S&P 500, which recorded a 37% return over the same duration, as well as the Amsterdam Exchange Index, which returned 21% in the same timeframe.

About Pershing Square Capital Management

Pershing Square Capital Management, L.P., is a prominent SEC-registered investment advisor located in New York City. The firm plays a vital role in guiding investment funds, navigating various sectors, and exploring fruitful investment strategies.

Frequently Asked Questions

What are the PSVII funds?

The PSVII funds are finite-life co-investment vehicles created to hold shares of Universal Music Group N.V. and are focused on maximizing investor returns.

Why did Pershing Square distribute UMG stock instead of cash?

Pershing Square believed that UMG stock is undervalued. The stock distribution allows limited partners to maintain ownership while benefiting from potential future increases in value.

How many shares of UMG are being distributed?

Approximately 47 million shares of UMG, equivalent to 2.6% of the company, will be distributed to non-Pershing Square affiliated investors.

What is Pershing Square's ownership in UMG?

Pershing Square currently holds about 140 million shares of UMG, constituting 7.6% of the company, primarily through its core funds.

How did UMG perform in terms of stock returns?

UMG has demonstrated a total return of 46% since the initial investment, outpacing both the S&P 500 and the Amsterdam Exchange Index during the same period.

About Investors Hangout

Investors Hangout is a leading online stock forum for financial discussion and learning, offering a wide range of free tools and resources. It draws in traders of all levels, who exchange market knowledge, investigate trading tactics, and keep an eye on industry developments in real time. Featuring financial articles, stock message boards, quotes, charts, company profiles, and live news updates. Through cooperative learning and a wealth of informational resources, it helps users from novices creating their first portfolios to experts honing their techniques. Join Investors Hangout today: https://investorshangout.com/

Disclaimer: The content of this article is solely for general informational purposes only; it does not represent legal, financial, or investment advice. Investors Hangout does not offer financial advice; the author is not a licensed financial advisor. Consult a qualified advisor before making any financial or investment decisions based on this article. The author's interpretation of publicly available data shapes the opinions presented here; as a result, they should not be taken as advice to purchase, sell, or hold any securities mentioned or any other investments. The author does not guarantee the accuracy, completeness, or timeliness of any material, providing it "as is." Information and market conditions may change; past performance is not indicative of future outcomes. If any of the material offered here is inaccurate, please contact us for corrections.