A secretive tycoon known as the ‘French Murdoch’ holds the key to Bill Ackman’s $64 billion bid for Universal Music Group

Activist investor Bill Ackman has his sights set on Universal Music Group, and he’s launched a complex $64 billion proposal for the label behind Bad Bunny, Taylor Swift, Paul McCartney and a long list of other superstars.

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To get his hands on the prize though, Ackman will first have to contend with another big personality: Vincent Bolloré, the 74-year-old secretive French billionaire who controls 28% of Universal through a complex web of holdings.

Known as the “French Murdoch” for building a $14 billion, right-leaning media empire stacked with family members and loyalists, Bolloré is a shrewd businessperson whose ascent to the top tiers of power is an object of fascination and awe in France and throughout Europe.

“Nine times out of 10 when people are speculating about what Bolloré will do, they get it wrong,” said Nicolas Marmurek, a London-based analyst who specializes in M&A.

Bolloré’s stake in Universal Music Group (UMG), which effectively gives him veto power over any deal, sets the stage for a potentially epic showdown between two of the most powerful figures in the business world. Ackman is famous for fighting his way through deals, launching aggressive campaigns that invest in companies and force management to adopt measures like cutting costs or spinning off assets. Past targets have included Wendy’s and Canadian Pacific Railway but he’s softened his approach in recent years, and he complimented UMG’s management when he launched his bid to merge and relist the company in the U.S.

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In bidding to revamp UMG, which owns 30% of the world’s recorded music, Ackman is testing a new playbook. Rather than influencing affairs through pressure tactics Pershing intends to lead a structural recapitalization, buying more shares, putting allies on the board, and re-listing the company in New York while existing management operates the company. It’s all part of Ackman’s broader vision of transforming Pershing into a diversified holding company in the image of Warren Buffett’s Berkshire Hathaway.

That makes winning over the unpredictable Bolloré mission critical for Ackman.

“Without Bolloré, we don’t have a transaction,” Ackman told investors on April 7 when he unveiled the details of his proposal. Ackman said his “first phone call” the day before announcing the deal, was to Bolloré Group, and he reportedly spoke with current chairman and CEO Cyrille Bolloré, Vincent Bolloré’s 40-year-old son. Ackman said he gave the younger Bolloré  a “high-level summary of the transaction.”

“And I guess the words I got back were, ‘These are music to my ears,’” Ackman said. “They are, I would say, intrigued,” he added later. “But of course, the devil’s in the details.”

A complex deal and a long tail

Ackman’s proposed deal is structured as a merger between UMG and a Pershing Square special-purpose acquisition rights company. Pershing Square’s cash commitment is €2.5 billion euro, and a combination of new debt, cash on UMG’s balance sheet, and asset sales will be used to finance the rest of the transaction. But the deal is highly complex and could end up being consummated in several different ways depending on whether UMG shareholders elect to swap their shares for cash or stock in the new entity, or a combination.

If shareholders approve the deal, the new U.S.-listed entity would have a $64 billion equity value once the finances are completed, plus $5.8 billion in new debt on UMG’s balance sheet. Artists would also get what Ackman described as “a nice €750 million euro check” which would come from the sale of UMG’s stake in Spotify.

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Universal’s board confirmed the proposal the same day as Ackman’s unveiling, describing it as “unsolicited and non-binding.” The UMG board said directors would review it “in accordance with fiduciary duties” and said it had “complete confidence in UMG’s strategy and the leadership of Sir Lucian Grainge.” Grainge has been CEO since 2011, when he led UMG’s acquisition of EMI’s recorded-music catalogue.

Ackman also pitched refreshing UMG’s board with two new members and naming Hollywood giant and Creative Artists Agency co-founder Michael Ovitz as chair. Ovitz has been friends with UMG CEO Grainge for four decades, Ackman has told investors (Ackman also noted that he’s been friends with Ovitz for 31 years).

The appeal of UMG for Ackman is in the shift the music industry has undergone throughout much of the past decade. As streaming has transformed the way consumers listen to music, the value of deep catalogs like Universal’s—which includes Billie Eilish, Drake, and Kendrick Lamar—has increased and changed the economics.

“The tail has become fatter and fatter and fatter,” said Tom Toumazis, MBE and global senior advisor at AlixPartners, describing music that’s more than 10 years old but continues to generate revenue. “A teenager running up that hill with Kate Bush” today is discovering music that didn’t exist a