Bill Ackman may bag a financial smash hit in the upcoming listing of Universal Music, writes CGAThompson
, making a valuation of 47 billion euros including debt plausible. That would represent a chart-topping return for the hedge fund manager who bought a stake on the cheap earlier this year.
. Earlier this year Bolloré sold a further 10% stake to Ackman’s Pershing Square, which valued the group at 35 billion euros including debt, and its equity at around 33 billion euros. That’s probably conservative. Universal’s back catalogue, which includes icons such as jazz great Louis Armstrong and The Beatles, is arguably superior to Warner’s. Plus, its 20% EBITDA margin last year was higher than the U.S. group’s 19%. Apply a multiple of, say, 26 times EBITDA, and Universal might have an enterprise value of 47 billion euros, or equity of nearly 45 billion euros. That would imply a 36% paper uplift for Ackman and a smash hit 60% increase for Tencent.
The pandemic has helped, as locked-down punters frenetically downloaded songs. Yet there is plenty of growth left in the market: global streaming penetration was around 6% in 2020, according to UBS. Ackman may be tempted to hold on rather than bank his gains.- Vivendi’s Universal Music, the world’s largest music company, whose artists include Lady Gaga and the Rolling Stones, published its prospectus on Sept. 14 before a stock market flotation next week.
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