UMG Clarifies Pershing's Listing Rights: Amsterdam Delisting Not Mandatory

Universal Music Group (UMG) has clarified Pershing Square's rights regarding the company's listing, stating that Pershing cannot force UMG to delist from Euronext Amsterdam or require a US domicile. This statement comes in response to billionaire Bill Ackman's announcement that UMG would move its primary listing to the United States by the end of 2025, citing antisemitic violence in Amsterdam as a tipping point.
UMG's listing prospectus grants Pershing the right to request a US listing, subject to certain conditions. Pershing must sell at least $500 million in UMG shares as part of the listing process. However, Pershing does not have the right to require UMG to become a US-domiciled company or delist from Euronext Amsterdam. UMG will endeavor to comply with its contractual obligations regarding the US listing process but will base any decisions beyond that on value maximization for all shareholders.

The requirement for Pershing to sell at least $500 million in UMG shares impacts the listing process by ensuring liquidity and market interest in the new listing. Selling such a significant stake could potentially dilute Pershing's ownership, but it also opens up opportunities for new investors. This condition may slow down the listing process, as Pershing needs to find buyers for these shares. However, it also provides an incentive for Pershing to maintain UMG's value, as they stand to gain from a successful listing.
UMG, following Pershing's request for a US listing, can take additional actions beyond mere compliance. The company can explore strategic initiatives that maximize shareholder value, such as optimizing its capital structure, expanding into new markets, or pursuing mergers and acquisitions. These decisions will be based on a thorough analysis of what is in the best interests of all shareholders, considering factors like market conditions, competitive landscape, and regulatory environment. UMG's board, independent of Pershing's influence, will evaluate these options to ensure they align with the company's long-term growth strategy.

UMG's decision to consider a US listing, as announced by Bill Ackman, is primarily driven by market factors, not geopolitical events. The company aims to maximize shareholder value, and a US listing could enhance liquidity and attract more investors. However, antisemitic violence in Amsterdam may have accelerated this decision, as Ackman cited it as a tipping point for relocating Pershing Square Holdings to the London Stock Exchange. Despite this, UMG's official statement clarifies that Pershing cannot force a US listing or require delisting from Euronext Amsterdam. The company will comply with contractual obligations but will base final decisions on value maximization for all shareholders.
In conclusion, UMG has clarified Pershing's rights regarding the company's listing, stating that Pershing cannot force a US listing or require delisting from Euronext Amsterdam. While UMG will comply with contractual obligations, the company's board will prioritize value-maximizing decisions that consider the best interests of all shareholders. The proposed US listing could enhance UMG's inclusion in major US market indexes, access to capital, and potential M&A opportunities, but it may also lead to a more stringent regulatory environment and potentially higher compliance costs. UMG's board will weigh these factors in deciding its listing location, ultimately aiming to maximize shareholder value.