UMG to Sell Half Spotify Stake for Buybacks

Universal Music Group announced on Wednesday that it will sell half of its equity stake in Spotify, with proceeds directed toward an expanded share buyback program and shared with artists, while reporting first-quarter revenue of 2.9 billion euros, equivalent to about 3.4 billion dollars.

The decision by UMG's board allows the company to monetize roughly half of its roughly 2.7 billion euro holding in the streaming service on its own terms. Company executives said the move honors commitments to artists, including a 2018 agreement with Taylor Swift that requires any proceeds from a Spotify stake sale to be distributed to artists on a nonrecoupable basis. UMG plans to use its portion of the funds initially for share repurchases and has proposed an additional 500 million euro buyback, subject to shareholder approval at its annual general meeting. This would double the total authorization to one billion euros. The board stated that it considers the company's shares undervalued relative to its performance and prospects.

The announcement comes three weeks after activist investor Bill Ackman, through his firm Pershing Square, submitted an unsolicited 64 billion euro bid to acquire UMG....