Under pressure from activist investor Bill Ackman and with shares falling more than 20% in a year, Universal Music Group (UMG) announced on Wednesday, April 29, that it intends to sell half of its stake in Spotify to reward shareholders.
Lady Gaga , Bad Bunny , and Taylor Swift 's record label owns a 3.16% stake in the Swedish streaming platform, valued at $2.9 billion, and plans to use some of the proceeds to fund a share buyback program that could reach €1 billion ($1.17 billion).
According to the company, the decision to divest part of its stake in Spotify was made taking into account the "importance of capital discipline" and the fact that the shares were significantly undervalued – in 12 months, UMG shares have accumulated a drop of 22.5%, bringing the market value to €35.6 billion.
But not all the proceeds from the sale of Spotify shares will go directly into investors' pockets. This is because, in 2018, when UMG rehired Taylor Swift, it committed to sharing any revenue from the sale of a stake in Spotify with the artists, in what became known as the "Taylor Swift clause".
The sale of the stake in Spotify was something Ackman raised in his proposal for UMG earlier this month. The investor, who successfully launched the IPO of Pershing Square , presented a proposal that values the company at approximately €55.7 billion (US$63.5 billion).
The proposal involves orchestrating a rather complex arrangement. Under the terms presented at the time, the transaction, divided between cash and shares, values the business at €30.40 per share.
Alternatively, Universal Music shareholders could receive either all the shares or the entire amount in cash. If a sufficient number of them opt for the shares only, those who choose the cash option will receive €22 per share.
According to Ackman, the company's management did an excellent job running the business. However, he attributed the low stock price to issues such as delays in the planned US listing and underutilization of the balance sheet.
The announcement of the sale of half of Spotify's stake and the share buyback was accompanied by the release of first-quarter results, in which revenue remained stable compared to the same period in 2025 due to the effects of the rising dollar.
UMG's revenue totaled €2.9 billion (US$3.4 billion), slightly below the average of estimates collected by Visible Alpha, which pointed to revenue of €2.94 billion. Adjusted EBITDA fell 3.8% to €636 million (US$743.7 million).
If he manages to convince the shareholders, the deal will represent a victory for Ackman, who, in 2021, made his first attempt to buy a 10% stake in the record label through a SPAC, in this case, Pershing Square Tontine Holdings.
However, shortly afterward, Ackman withdrew the approximately $4 billion offer after the Securities and Exchange Commission (SEC) raised a number of questions about the structure of the deal, which also included a listing on the New York Stock Exchange (NYSE).
