Universal Music Group discussed going private with buyout shops - Bloomberg

What happened

Universal Music Group held early talks with buyout firms Apollo, TPG and Blackstone about a proposed take-private, but the discussions have not progressed and no sales process has started, Bloomberg reported; the board is aware and shares are down almost 30% this year.

Proposed

Global impact / market context

A buyout would take the music company private, freeing owners from quarterly public scrutiny to restructure. Because talks stalled and no sale process began, investors still hold the current public shares and face the weak price with no deal yet.

Analyst inference

This follows Universal rejecting Bill Ackman's April proposal to merge with Pershing Square and list in New York, offering €9.4B in cash. That rejection plus these preliminary buyout talks suggest the company is weighing ownership options while its stock underperforms.

Analyst inference

What to watch

1. Watch whether Universal or the buyout firms confirm any talks, since Bloomberg's report relied on unnamed people and all parties declined to comment. Confirmed
2. Watch whether a formal buyout proposal emerges or a sales process begins, since none has started and the preliminary talks have not progressed. Proposed
3. Watch the share price, down almost 30% this year, since a lower valuation could make a buyout cheaper but may also reflect doubt about a deal. Analyst inference

Evidence

• seekingalpha.com