Ackman’s pershing square pushes for UMG’s secondary listing in the U.S.

Bill Ackman’s Pershing Square Capital Management is urging Universal Music Group (UMG) to establish a secondary listing in the United States. This move comes after Ackman publicly expressed his desire to shift UMG’s primary listing from Amsterdam to New York, citing various reasons, including increasing shareholder value and enhancing market visibility. While UMG has acknowledged Ackman’s request, the company has not yet committed to a full relocation of its primary listing.

Ackman’s Rationale: Unlocking Value and Boosting Visibility

Ackman, a prominent investor and UMG board member, believes that a U.S. listing would significantly benefit the music giant. He argues that listing on a major U.S. exchange, such as the New York Stock Exchange (NYSE) or Nasdaq, would:

Increase Trading Liquidity: A U.S. listing would provide access to a much larger pool of investors, leading to increased trading volume and liquidity for UMG shares.

Enhance Valuation: Ackman believes that UMG’s valuation is currently undervalued compared to its U.S.-listed peers. A U.S. listing could help close this valuation gap.

Attract U.S. Investors: Many U.S.-based institutional investors and index funds are restricted from investing in foreign-listed companies. A U.S. listing would open up UMG to these investors.

Boost Brand Recognition: Listing on a prominent U.S. exchange would further enhance UMG’s brand recognition and visibility among U.S. investors and the general public.

UMG’s Response: Acknowledgment and Consideration

UMG has acknowledged Ackman’s request and stated that it will carefully consider the potential benefits and drawbacks of a U.S. listing. The company has not yet made a definitive decision on whether to pursue a full relocation of its primary listing or a secondary listing.

The Mechanics of a Secondary Listing

A secondary listing would allow UMG to have its shares traded on a U.S. exchange in addition to its primary listing in Amsterdam. This would provide U.S. investors with easier access to UMG shares without requiring the company to fully relocate its domicile.

Potential Challenges and Considerations

While a U.S. listing offers several potential advantages, there are also some challenges and considerations that UMG needs to address:

Regulatory Requirements: Listing on a U.S. exchange involves complying with U.S. securities regulations, which can be complex and costly.

Reporting Standards: UMG would need to adhere to U.S. accounting and reporting standards, which may differ from those in Europe.

Shareholder Base: A shift in listing could potentially alter UMG’s shareholder base, with a greater proportion of U.S. investors.

Costs and Resources: Establishing and maintaining a U.S. listing would require significant resources and investment.

The Broader Context: Global Capital Markets and Competition

Ackman’s push for a U.S. listing for UMG reflects a broader trend of companies seeking access to the deep and liquid U.S. capital markets. The U.S. remains the world’s largest and most influential financial center, attracting companies from around the globe.

The music industry is also becoming increasingly globalized and competitive, with streaming services and digital platforms playing a dominant role. A U.S. listing could help UMG further solidify its position as a global leader in the music industry.