Universal Music Group to Monetize Spotify Stake, Boost Share Buybacks by 2026

Universal Music Group (UMG) has announced plans to monetize half of its equity stake in Spotify and significantly expand its share buyback program. The decision was disclosed alongside UMG’s first-quarter earnings results.

“Given the importance of capital discipline, the expected returns from buying back UMG’s shares, and the Company’s confidence in the long-term growth of the ecosystem, in March 2026 the Board authorized the monetization of half of the Company’s equity stake in Spotify. Consistent with the Company’s approach to artist compensation, artists will share in the proceeds. UMG’s share will initially be directed towards its buyback program.”

The board has approved an increase in the share repurchase program to €1 billion. UMG will initiate a €500 million buyback following the completion of a separate €500 million repurchase program already in progress. The new buyback is contingent on market conditions and shareholder approval.

UMG intends to use the repurchased shares to fulfill obligations under its global equity plan and to “reduce the share capital of the company.” The board may further expand the buyback authorization later, depending on market conditions.

Pershing Square’s $64.4 Billion Takeover Bid

The announcement follows a $64.4 billion takeover bid submitted by Bill Ackman’s Pershing Square Capital Management. Ackman cited several factors driving the bid, including:

• UMG’s “languished” stock price, attributed to its U.S. listing;
• Uncertainty surrounding Bolloré Group’s 18% stake in the company;
• Underutilization of UMG’s balance sheet, leading to reduced returns on equity;
• Lack of a “publicly disclosed capital allocation plan and earnings algorithm”;
• Investors not fully valuing UMG’s €2.7 billion stake in Spotify;
• Suboptimal shareholder relations, communications, and engagement.

The proposed cash-and-stock deal is expected to close by the end of the year. Upon completion, a newly merged company would list on the New York Stock Exchange. UMG shareholders would receive a total of €9.4 billion ($10.87 billion) in cash. Each UMG share would be exchanged for €5.05 ($5.84) in cash and 0.77 shares of the new UMG stock, totaling €30.40 per share—a 78% premium over UMG’s April 2 closing price.

The deal requires approval from UMG and SPARC’s boards of directors, a two-thirds vote by UMG shareholders, and regulatory clearances. UMG’s board and advisers stated they would review the proposal in line with their fiduciary duties, assessing its impact on shareholders, employees, artists, songwriters, and other stakeholders.

In a statement, UMG expressed “complete confidence” in its strategy and leadership under Sir Lucian Grainge and the management team. The company added that it would refrain from further comments until the review is complete.