Thanks for the article. My concerns around UMG are:
a) since it's listing it's materially disappointed in terms of operating leverage & it would appear that management's desire to grow the lower margin parts of the business have masked / will continue to mask the higher quality parts of the business
b) Management's incentive plan promotes growth and absolute earnings increases - this encourages what I mention in point a), meaning that there is a de-rating effect as the business becomes lower quality. Their capital allocation is questionable (their buybacks have been much higher up)
c) investments in catalogue and advances have been substantial, for a long period of time, and it's not obvious that they're yielding much benefit!
d) Ackman selling out completely concerns me - why would he do that if he felt the stock was so cheap? I get that he couldn't take control of it but surely you'd stay invested if you thought it was so appealing? Or was he saying that the current management aren't up to creating shareholder value?
Yes, there are cost cuts that can be made, Downtown integration issues passing etc. but ultimately the reason the stock has tanked, despite absolute earnings growth since listing, is a huge de-rating and I understand why the market has done that given what I've mentioned.
Your concerns are familiar. That's why sentiment is weak.
I think much of the concern is over done. Weak sentiment often represents an investment opportunity.
UMG has unique assets that are generating strong revenue growth at relatively stable margins, and with no maintenance CAPEX required.
However, investing is more an art than a science. If you feel uncomfortable, that is something in your mind telling you that this isn't the correct investment for you.
When that happens to me, I move on to something else.
As the old saying goes, 'there are plenty more fish in the sea!'
Absolutely. In terms of owning unique assets with no maintenance capex, I couldn't agree more - I guess that's why I've been so disappointed. I'd love to know why I'm wrong on my concerns (the least important of which is Ackman/Pershing's exit). Thanks for the reply...
You may not be wrong. I was also curious about why Ackman might look to acquire the company for €28 and when that failed, sell his stake for €18. That is difficult to reconcile. Ultimately, he wasn’t looking to pay cash for the business. He wanted to transfer the business to a US listed entity, and shareholders would effectively receive shares in the new company for shares in the existing company. It was more about a change in control and jurisdiction. It may have been about reducing the influence of hte Bollore family. In this context, it is easier to rationalise what happened. He attempted to take control, failed, and so moved on to another activist opportunity elsewhere.
Either way, I think focusing on Ackman is a distraction. The failed takeover ultimately resulted in the share price collapse. Perhaps there were people buying in the hope of a special situation windfall if another buyer stepped in for UMG, but when that didn’t happen, they also moved on.
The key is not to confuse intrinsic value with price. The share price may be down 30% from its peak, but the intrinsic value is unchanged. That’s where I see an opportunity. Call it sentiment arbitrage.
I may be wrong. It may be down at €10 next year. But I think there is far more chance it is at €20.
Thank you. I'm less concerned about Ackman's motivations / reasons. I am much more concerned about the fundamentals: lack of operating leverage, management quality and their incentive scheme (it seems to drive their behaviour of seeking all growth even if the mix is lower quality & they ascribe equal importance to growth irrespective of what vertical it come from), deteriorating mix of the business and the capital allocation. When I originally analysed this (when it came to market and before as part of Vivendi), I was attracted to what you mention. My disappointment has been that had you have told me what the revenue line would be now in 2026, I would have assumed much higher margins - justifying a high quality / compounder multiple. Instead the opposite has happened. Those are my real concerns and what I believe has driven the share price lower (obviously I may be wrong). It makes me think that ultimately the share price move is understandable - a sizeable de-rating for a business that has some excellent parts to it, but also some low quality parts to it (all driven by management action).
The key is whether the acquisition will be well integrated.
If it works, the business should generate more revenue, albeit on slightly lower margins.
Time will tell.
For the avoidance of doubt, this is unlikely to be a long-term holding of mine, I just see a special situation which is likely to generate an acceptable return in the short-term. It's only a small position in my portfolio.
Universal Music Group repurchased 3,349,000 of its own shares between August 6 and August 7, 2026, at an average price of €15.36 per share, for a total consideration of €51,427,203.
A clear signal from management that they are trading well below intrinsic value. More buybacks are expected in the days and weeks ahead.
1. The ackaman offer valued UMG around ~22€ (and not 27-28€), the gap being a dividend to be paid by the new UMG.
2. Bollore was historically seller on the market (with no unique counterparty that get larger influence on the group) at 27-28€ but not at 22€
3. the new UMG offer would have changed shareholder rights and reduce Bollore position. It is a pure "control premium" but Bollore definitely doesn't want to give up their current predominant position in current UMG on the cheap. I am not sure he would have sold at 28€ without strong guarantees over future influence on the new UMG
4. On top of potential lucrative deal for Ackman at 22€, getting larger control on UMG would have also created flywheel effect for his asset management company with fresh money subscription.
_
Overall, the deal failed about insufficient valuation and matters about lower future shareholder influence for Bollore
UMG was happily buy backing shares around 18€. Bollore had also been a buyer around this level.
I would be interesting to see if Bollore buys back again at 15€ and to what extent UMG is accelerating their buyback.
_
My TP is about 25-28€. I was not a buyer yet a 18€ but I am in at 15€
Correct, he sold in June this year. The shares were placed via an overnight block trade at €17.66 each, which included UMG itself buying back €250 million of its stock directly from the fund.
Vivendi is trading at a substantial discount to the market value of its parts, with its stake in UMG alone valued at more that the market cap of Vivendi ?!?!
This isn't a new problem. Activists have been trying to unlock value for over a decade.
In the past Vivendi’s management has pursued a multi‑pronged plan to close it:
(1) a formal break‑up into four listed entities (2024) with the Vivendi we are discussing now being the residual Vivendi after the other three parts were spun-off,
(2) targeted divestitures; Vivendi has been trimming non‑core or contentious holdings such as Telecom Italia and Telefonica:
, and
(3) an aggressive share buyback.
Vivendi has run a material buyback programme that started on 25 March 2026 and is being used to reduce the share count, thereby increasing NAV per share and, in management’s view, narrowing the discount.
The issue here is that activist investors have clashed with Vivendi and the Bollore family for many years. PSAM (2015) and Elliott Management (2018) have both tried to exert influence. Some minor concessions have been made, but not without first reinforcing the Bolloré family’s control via double‑voting rights. More recently, was the Pershing Square intervention, but before that, in relation to the 2024 split of the conglomerate, CIAM Fund and Phitrust argued against the split stating that the plan primarily benefited the Bolloré family by entrenching its influence across four separate listed vehicles. Nonetheless, the Bollore family ensured that the shraeholder vote approved the split.
Bolloré SE directly owns around 29.9% of Vivendi’s share capital, and together with loyal employees and other aligned shareholders, it typically commands a decisive majority of votes on key resolutions.
This is typical of family operated entities in Europe. It's like getting into bed with the mafia.
CIAM pursued a separate legal strategy to force a buyout of minorities. It argued that the Bolloré family exercised “de facto control” of Vivendi and should therefore be required under French law to launch a mandatory public tender offer once its effective stake passed 30%. In April 2025, the Paris Court of Appeal initially ruled against Bolloré, suggesting a mandatory buyout could be triggered. However, in July 2026, the Paris Court of Appeal (on referral after a Cour de Cassation ruling) held that Vincent Bolloré and Bolloré SE do not control Vivendi in the legal sense, because they do not hold a majority of votes exercised at general meetings. The court applied a very questionable narrow, voting‑rights‑based test and rejected broader “influence” arguments, almost as though it had predetermined the desired outcome and found a path to get there. Do the French elite, including the Bollore family, exert too much influence on the institutions of state? Or is this another example of French protectionist culture in relation to their corporate assets?
Institutional and index investors hold a meaningful slice of the free float (JPMorgan estimated ~15% of free float), but they are fragmented and, in practice, have tended to back management’s value‑unlock plans despite governance worries.
Is the huge discount to NAV has not been resolved over the past decade, what are the chances it will be resolved in the next few years? Is Vivendi a value trap?
UMG is the prize asset. If the Bollore family and Vivendi decide to reduce their holding (or to exit entirely), there will be no shortage of buyers. Alternatively, both UMG and Vivendi are buying back shares. The recent pullback in UMG is likely to encourage them to step up that activity in the short term. Why not crystalize the discount while it is available. For me, there is plenty of downside support providing a big margin of safety (that's the beauty of drawdowns). I still prefer UMG over Vivendi, but others may disagree.
I don't believe Bollore rejected the Pershing Sq bid based on value. I think it didn't like the structure. Pershing wanted to pay under 10bn Euro cash, and then issue stock in a new UMG to existing shareholders for the balance. It wanted to move the listing from Amsterdam to the US. It also wanted to initiate other changes. Put yourself in the shoes of Bollore with a ~29% economic interest (direct and indirect). Do you want to roll the dice with new owners shaking up the business? Bollore himself stated that had it been an all cash offer he would have considered it.
The important part is that both Ackman and Bollore believe the company is worth far more than where it was trading, and even more so after the sell off following the Q2 earnings. That is the beauty of the public market. We can capitalize on that opportunity.
I haven't done that appraisal, but if you want pure exposure to UMG, you need to invest directly. Otherwise, you are investing in UMG + other stuff. A very different proposition.
What do we know?
- Ackman and Bollore couldn't agree terms, but...
- Ackman had, and Bollore has, significant investments in UMG, and....
- both Ackman and Bollore know this business better than most, and....
- both believe that its price understates its intrinsic value, and...
- neither is looking for an exit, both wish to remain invested and/or increase their stake.
That makes for a compelling investment case following a 25% drawdown from a price that both thought was already too low.
As a special situation, this is a kind of arbitrage between a market that prices businesses based on the most recent quarterly earnings, and those that see this not as a short-term lottery ticket, but a business with excellent prospects and future discounted cash flows are not recognised in the price. As Charlie Munger used to say, the market is a mechanism for transfering wealth from people with no patience, to people prepared to do the analysis and wait.
Please see my comment in response to Antonius on this thread. Bollore is a shareholder (the largest), so he is aligned in wanting what is best for shareholders. Any deal needs his support.
Thanks for the article. My concerns around UMG are:
a) since it's listing it's materially disappointed in terms of operating leverage & it would appear that management's desire to grow the lower margin parts of the business have masked / will continue to mask the higher quality parts of the business
b) Management's incentive plan promotes growth and absolute earnings increases - this encourages what I mention in point a), meaning that there is a de-rating effect as the business becomes lower quality. Their capital allocation is questionable (their buybacks have been much higher up)
c) investments in catalogue and advances have been substantial, for a long period of time, and it's not obvious that they're yielding much benefit!
d) Ackman selling out completely concerns me - why would he do that if he felt the stock was so cheap? I get that he couldn't take control of it but surely you'd stay invested if you thought it was so appealing? Or was he saying that the current management aren't up to creating shareholder value?
Yes, there are cost cuts that can be made, Downtown integration issues passing etc. but ultimately the reason the stock has tanked, despite absolute earnings growth since listing, is a huge de-rating and I understand why the market has done that given what I've mentioned.
Your concerns are familiar. That's why sentiment is weak.
I think much of the concern is over done. Weak sentiment often represents an investment opportunity.
UMG has unique assets that are generating strong revenue growth at relatively stable margins, and with no maintenance CAPEX required.
However, investing is more an art than a science. If you feel uncomfortable, that is something in your mind telling you that this isn't the correct investment for you.
When that happens to me, I move on to something else.
As the old saying goes, 'there are plenty more fish in the sea!'
Absolutely. In terms of owning unique assets with no maintenance capex, I couldn't agree more - I guess that's why I've been so disappointed. I'd love to know why I'm wrong on my concerns (the least important of which is Ackman/Pershing's exit). Thanks for the reply...
You may not be wrong. I was also curious about why Ackman might look to acquire the company for €28 and when that failed, sell his stake for €18. That is difficult to reconcile. Ultimately, he wasn’t looking to pay cash for the business. He wanted to transfer the business to a US listed entity, and shareholders would effectively receive shares in the new company for shares in the existing company. It was more about a change in control and jurisdiction. It may have been about reducing the influence of hte Bollore family. In this context, it is easier to rationalise what happened. He attempted to take control, failed, and so moved on to another activist opportunity elsewhere.
Either way, I think focusing on Ackman is a distraction. The failed takeover ultimately resulted in the share price collapse. Perhaps there were people buying in the hope of a special situation windfall if another buyer stepped in for UMG, but when that didn’t happen, they also moved on.
The key is not to confuse intrinsic value with price. The share price may be down 30% from its peak, but the intrinsic value is unchanged. That’s where I see an opportunity. Call it sentiment arbitrage.
I may be wrong. It may be down at €10 next year. But I think there is far more chance it is at €20.
I hope that helps
Thank you. I'm less concerned about Ackman's motivations / reasons. I am much more concerned about the fundamentals: lack of operating leverage, management quality and their incentive scheme (it seems to drive their behaviour of seeking all growth even if the mix is lower quality & they ascribe equal importance to growth irrespective of what vertical it come from), deteriorating mix of the business and the capital allocation. When I originally analysed this (when it came to market and before as part of Vivendi), I was attracted to what you mention. My disappointment has been that had you have told me what the revenue line would be now in 2026, I would have assumed much higher margins - justifying a high quality / compounder multiple. Instead the opposite has happened. Those are my real concerns and what I believe has driven the share price lower (obviously I may be wrong). It makes me think that ultimately the share price move is understandable - a sizeable de-rating for a business that has some excellent parts to it, but also some low quality parts to it (all driven by management action).
The acquisition impacted margins. It was known.
The key is whether the acquisition will be well integrated.
If it works, the business should generate more revenue, albeit on slightly lower margins.
Time will tell.
For the avoidance of doubt, this is unlikely to be a long-term holding of mine, I just see a special situation which is likely to generate an acceptable return in the short-term. It's only a small position in my portfolio.
Thank you
Universal Music Group repurchased 3,349,000 of its own shares between August 6 and August 7, 2026, at an average price of €15.36 per share, for a total consideration of €51,427,203.
A clear signal from management that they are trading well below intrinsic value. More buybacks are expected in the days and weeks ahead.
Some food for thoughts :
1. The ackaman offer valued UMG around ~22€ (and not 27-28€), the gap being a dividend to be paid by the new UMG.
2. Bollore was historically seller on the market (with no unique counterparty that get larger influence on the group) at 27-28€ but not at 22€
3. the new UMG offer would have changed shareholder rights and reduce Bollore position. It is a pure "control premium" but Bollore definitely doesn't want to give up their current predominant position in current UMG on the cheap. I am not sure he would have sold at 28€ without strong guarantees over future influence on the new UMG
4. On top of potential lucrative deal for Ackman at 22€, getting larger control on UMG would have also created flywheel effect for his asset management company with fresh money subscription.
_
Overall, the deal failed about insufficient valuation and matters about lower future shareholder influence for Bollore
UMG was happily buy backing shares around 18€. Bollore had also been a buyer around this level.
I would be interesting to see if Bollore buys back again at 15€ and to what extent UMG is accelerating their buyback.
_
My TP is about 25-28€. I was not a buyer yet a 18€ but I am in at 15€
Pershing Square sold all of its remaining stake right after their bid was rejected for ~18€ per share.
Correct, he sold in June this year. The shares were placed via an overnight block trade at €17.66 each, which included UMG itself buying back €250 million of its stock directly from the fund.
with the other stuff (tim mfe banijaj gameloft telefonica) at zero you still buy their 9.94 % in umg with 38% discount.
Vivendi SE (VIV.PA) trades at a market cap far below its intrinsic value.
On a pure sum‑of‑parts basis using current market valuations for the listed components and Vivendi’s own portfolio marks:
Listed stakes (UMG, Banijay, MFE, Lagardère, Prisa): ~€5.2 bn (20 Apr 2026).
Unlisted assets + treasury: ~€0.35 bn.
Net debt: ~€1.5 bn.
Indicative NAV equity value: ~€4.0 bn.
Market cap: ~€2.0–2.2 bn.
Vivendi is trading at a substantial discount to the market value of its parts, with its stake in UMG alone valued at more that the market cap of Vivendi ?!?!
This isn't a new problem. Activists have been trying to unlock value for over a decade.
In the past Vivendi’s management has pursued a multi‑pronged plan to close it:
(1) a formal break‑up into four listed entities (2024) with the Vivendi we are discussing now being the residual Vivendi after the other three parts were spun-off,
(2) targeted divestitures; Vivendi has been trimming non‑core or contentious holdings such as Telecom Italia and Telefonica:
, and
(3) an aggressive share buyback.
Vivendi has run a material buyback programme that started on 25 March 2026 and is being used to reduce the share count, thereby increasing NAV per share and, in management’s view, narrowing the discount.
The issue here is that activist investors have clashed with Vivendi and the Bollore family for many years. PSAM (2015) and Elliott Management (2018) have both tried to exert influence. Some minor concessions have been made, but not without first reinforcing the Bolloré family’s control via double‑voting rights. More recently, was the Pershing Square intervention, but before that, in relation to the 2024 split of the conglomerate, CIAM Fund and Phitrust argued against the split stating that the plan primarily benefited the Bolloré family by entrenching its influence across four separate listed vehicles. Nonetheless, the Bollore family ensured that the shraeholder vote approved the split.
Bolloré SE directly owns around 29.9% of Vivendi’s share capital, and together with loyal employees and other aligned shareholders, it typically commands a decisive majority of votes on key resolutions.
This is typical of family operated entities in Europe. It's like getting into bed with the mafia.
CIAM pursued a separate legal strategy to force a buyout of minorities. It argued that the Bolloré family exercised “de facto control” of Vivendi and should therefore be required under French law to launch a mandatory public tender offer once its effective stake passed 30%. In April 2025, the Paris Court of Appeal initially ruled against Bolloré, suggesting a mandatory buyout could be triggered. However, in July 2026, the Paris Court of Appeal (on referral after a Cour de Cassation ruling) held that Vincent Bolloré and Bolloré SE do not control Vivendi in the legal sense, because they do not hold a majority of votes exercised at general meetings. The court applied a very questionable narrow, voting‑rights‑based test and rejected broader “influence” arguments, almost as though it had predetermined the desired outcome and found a path to get there. Do the French elite, including the Bollore family, exert too much influence on the institutions of state? Or is this another example of French protectionist culture in relation to their corporate assets?
Institutional and index investors hold a meaningful slice of the free float (JPMorgan estimated ~15% of free float), but they are fragmented and, in practice, have tended to back management’s value‑unlock plans despite governance worries.
Is the huge discount to NAV has not been resolved over the past decade, what are the chances it will be resolved in the next few years? Is Vivendi a value trap?
UMG is the prize asset. If the Bollore family and Vivendi decide to reduce their holding (or to exit entirely), there will be no shortage of buyers. Alternatively, both UMG and Vivendi are buying back shares. The recent pullback in UMG is likely to encourage them to step up that activity in the short term. Why not crystalize the discount while it is available. For me, there is plenty of downside support providing a big margin of safety (that's the beauty of drawdowns). I still prefer UMG over Vivendi, but others may disagree.
vivendi seems an even greater opportunity when you have patience to wait out bollore.
I don't believe Bollore rejected the Pershing Sq bid based on value. I think it didn't like the structure. Pershing wanted to pay under 10bn Euro cash, and then issue stock in a new UMG to existing shareholders for the balance. It wanted to move the listing from Amsterdam to the US. It also wanted to initiate other changes. Put yourself in the shoes of Bollore with a ~29% economic interest (direct and indirect). Do you want to roll the dice with new owners shaking up the business? Bollore himself stated that had it been an all cash offer he would have considered it.
The important part is that both Ackman and Bollore believe the company is worth far more than where it was trading, and even more so after the sell off following the Q2 earnings. That is the beauty of the public market. We can capitalize on that opportunity.
then the question remains invest in umg through vivendi with a very big discount or through bollore or directly in umg.
I haven't done that appraisal, but if you want pure exposure to UMG, you need to invest directly. Otherwise, you are investing in UMG + other stuff. A very different proposition.
What do we know?
- Ackman and Bollore couldn't agree terms, but...
- Ackman had, and Bollore has, significant investments in UMG, and....
- both Ackman and Bollore know this business better than most, and....
- both believe that its price understates its intrinsic value, and...
- neither is looking for an exit, both wish to remain invested and/or increase their stake.
That makes for a compelling investment case following a 25% drawdown from a price that both thought was already too low.
As a special situation, this is a kind of arbitrage between a market that prices businesses based on the most recent quarterly earnings, and those that see this not as a short-term lottery ticket, but a business with excellent prospects and future discounted cash flows are not recognised in the price. As Charlie Munger used to say, the market is a mechanism for transfering wealth from people with no patience, to people prepared to do the analysis and wait.
I love these situations.
I agree. They aren't interested in shareholder interests. That’s why the stock looks cheap.
Please see my comment in response to Antonius on this thread. Bollore is a shareholder (the largest), so he is aligned in wanting what is best for shareholders. Any deal needs his support.