UMG to Sell Spotify Stake, Doubles Share Buyback Plan

UMG Announces Spotify Stake Sale and Increased Buyback

Universal Music Group revealed plans to sell half of its equity stake in Spotify and double its share buyback program. The announcement coincided with its first-quarter financial report, which showed revenue impacted by a weaker U.S. dollar.

Financial Performance and Market Context

UMG reported first-quarter revenue of 2.9 billion euros, which was flat year-on-year but represented an 8.1% increase in constant currency. Adjusted EBITDA fell 3.8% to 636 million euros but rose 3.9% on a constant currency basis. The move follows an unsolicited bid from activist investor Bill Ackman, who had previously suggested selling the Spotify holding.

Impact on Shareholders and Artists

Proceeds from the stake sale will fund the increased buyback and be shared with artists, honoring a 2018 commitment made to Taylor Swift. UMG's board approved an additional 500-million-euro share buyback, stating that it views the company's shares as undervalued relative to its performance and prospects.

Summary and Outlook

UMG's decision reflects a strategy to unlock value from its investments and return capital to shareholders and artists. The market will closely watch the execution of the stake sale and buyback program as key indicators of the company's capital allocation strategy moving forward.

**FAQ**

**Q:** Why is Universal Music Group selling its Spotify stake?
A:** UMG is selling half of its stake to fund a doubled share buyback program and to share the proceeds directly with its artists on a non-recoupable basis.

**Q:** How did UMG's first-quarter earnings perform?
A:** First-quarter revenue was 2.9 billion euros, flat in reported terms but up 8.1% in constant currency. The reported figures were negatively affected by a weaker U.S. dollar.

Source: Investing.com