Universal to sell half of its Spotify stake, generating around $1.4bn

Universal Music Group (UMG) has announced a significant corporate action, confirming the sale of half its equity stake in the audio streaming giant, Spotify. The move, disclosed on April 29 alongside its Q1 2026 financial results, is designed to generate approximately $1.4 billion (€1.2 billion) and finance a substantially expanded share buyback program.

This strategic decision comes at a critical juncture for the world’s largest music company, currently fielding a monumental $64 billion takeover proposal from activist investor Bill Ackman’s Pershing Square.

The proceeds from the Spotify stake sale will initially be directed towards a newly expanded share repurchase authorisation totalling €1 billion (approximately USD $1.17 billion). This figure effectively doubles the previous €500 million program announced just weeks prior on March 30. The second €500 million tranche of the authorisation remains subject to shareholder approval, which is expected to be sought at UMG’s 2026 Annual General Meeting scheduled for May 13.

UMG’s proactive step to monetise a portion of its digital assets is rooted in a fundamental belief that its current market valuation is depressed. The company’s board stated that it “considers UMG’s share price to be undervalued relative to its business performance and prospects”.

This sentiment is precisely the rationale cited by Pershing Square for its audacious takeover proposal, which launched three weeks ago and included a controversial plan to fully liquidate UMG’s Spotify holding to help bankroll the acquisition. While UMG’s stock has declined approximately 30 percent over the last year, its underlying business continues to demonstrate robust growth, creating a clear gap between intrinsic value and market perception. UMG’s board has yet to formalise a position on the Ackman bid

The decision to divest half of the holding comes despite a recent drop in Spotify’s share price, which fell double-digits just prior to the UMG announcement after the streaming platform’s Q2 operating-income guidance disappointed Wall Street expectations. Based on Spotify’s closing price on April 28, UMG’s remaining stake represents 6,487,000 shares, translating to a 3.10 percent equity position in the platform, valued at a substantial €3,214 million as of the close of 2025.

Crucially, the music major reaffirmed its long-standing commitment to its creative partners. A press release confirmed that “consistent with the company’s approach to artist compensation, artists will share in the proceeds.”

This adherence to non-recoupable profit sharing, a policy UMG adopted in 2018 at the request of high-profile artists like Taylor Swift and mirroring a prior move by Sony Music, ensures that the financial windfall from the Spotify stake flows down to the content creators who underpin UMG’s value.

Matt Ellis, UMG’s chief financial officer, framed the action as a direct benefit to investors. “The important steps we are announcing today to increase our share buyback authorisation and monetise 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,” Ellis said.

Furthermore, on the accompanying analyst call, UMG’s CEO Lucian Grainge underscored that the monetisation strategy “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.” The action serves as a strong counter-signal to the market and potential bidders, leveraging assets to directly reward existing shareholders.