UMG is Selling 50% of its Stake in Spotify to Fund Buyback Program
The program will be worth $1.17 billion
Universal Music Group (UMG) has announced it will sell half of its stake in Spotify to buy back its own shares. The plan was laid out in the major label’s Q1 earnings report.
The details:
Artists will receive a share of the proceeds from the sale of the Spotify shares.
That policy has been in place since 2018.
UMG holds 6,487,000 Spotify shares. This equals 3.10% of the company.
Per closing prices on Tuesday, April 28, that is worth $1.4 billion.
UMG introduced a €500 million buyback program in March. The Spotify sale expands it to €1 billion.
Shareholders will have to approve the second €500 million in the company’s general call on May 13.
Background:
UMG recently received an offer from Bill Ackman‘s Pershing Square to purchase the label for $64 billion.
That deal would include liquidating UMG’s entire stake in Spotify as a means of contributing funds.
What they said:
Matt Ellis, UMG‘s CFO: “The important steps we are announcing today to increase our share buyback authorization and monetize a portion of our equity stake in Spotify will lead to enhanced shareholder value while maintaining the flexibility the company requires to drive further success.
Lucian Grainge, UMG CEO: “[The Spotify monetization] underscores the importance of our capital discipline, the expected returns from our buybacks and our confidence in the long-term growth of UMG, as well as the broader music ecosystem.”
👋 Disclosures & Transparency Block
This article was written with information sourced from Music Business Worldwide.
We covered it because UMG is one of the three major labels.
