If you are a regular person, you will be exposed to music and some you will like, some you love and some you will buy. As we move into the summer months, you can count on festivals to have food, drink and music as entertainment. The issue is always how does someone profit from the music?

In an article by Svea Herbst-Bayliss, Dawn Chmielewski and Mateusz Rabiega of Reuters, Pershing Square which is run by Bill Ackman has made a bid to buy Universal Music Group for $64 billion. The cash and share offer values the company at $48.95 a share which is a 78% premium to the last closing price.

Universal Music Group is the company behind superstars Taylor Swift, Billie Ellish, Bad Bunny and Kendrick Lamar. The company is on the Amsterdam Stock Exchange and the idea would be to list in on the New York Stock Exchange which would allow index funds to own the stock.

Fears of AI disrupting the music industry have played a role in UMG’s lackluster performance. Its share of the music market has been sliding and streaming grow is decelerating, Wells Fargo analyst noted.

The large shareholders of UMG are Bollore Group with 18.5%, Vivendi Group owns 13.5% and China’s Tencent and Pershing Square (4.7%) are significant shareholders. The Bollore Group controls 80% of the voting rights.

Mr. Ackman has long held an interest is owning a larger stake in the company, in 2021 proposed to take it private but US regulators said no. Until last year, Mr. Ackman was on the Board of Directors.

Mr. Ackman said the current CEO Lucian Grainge should remain as CEO, as well as a new director would be Michael Ovitz. The offering is said to be friendly.

UMG’s shares have lost 1/3 of their value since the IPO and trade at a multiple of 21.8 times earnings compared with Spotify’s 40 times earnings.

Even as global music revenues grow year after year, UMG and other labels such as Sony and Warner Music are scrambling to stay competitive as streaming services from Spotify, Amazon, Apple and Deezer take an even greater share.

On the concern about AI, one survey found that 97% of listeners cannot distinguish between AI and human generated songs.

Linking to dividend paying stocks, in this case Mr. Ackman knows who the large shareholders are and if they wish to sell, offering a large premium to the stock should make the takeover go easier. Since the Bollore Group owns the majority of voting rights, it comes to whether he wants to sell or why he cannot what Mr. Ackman proposes?

There are more questions than answers, till the next time – to raising questions.