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(Sharecast News) - Universal Music Group shares fell on Thursday after Bill Ackman's Pershing Square exited its 1.4bn stake in the company, just days after the world's largest music group rejected a takeover proposal from the hedge fund billionaire.
The Amsterdam-listed company said it had repurchased 14.16m ordinary shares from Pershing Square funds at 17.66 each, for total consideration of about 250m.
The repurchase formed part of Pershing's sale of its entire position in UMG, with Bloomberg reporting that the funds offered about 80.6m shares in an overnight placing priced at 17.66 apiece.
UMG shares fell as much as 7.6% on Thursday morning to 17.74, but remained above the placing price, which was set at an 8% discount to Wednesday's close.
The company said the buyback was executed outside its existing 500m share repurchase programme, but under the additional 500m buyback authorisation approved by shareholders at its annual general meeting on 13 May.
UMG said the repurchased shares would be used to meet obligations under its 2022 Global Equity Plan and related subplans, and/or to reduce share capital.
The maximum number of shares available for use under the equity plan would remain unchanged, it added.
Pershing's exit came shortly after UMG rejected Ackman's latest takeover approach, which Bloomberg said would have valued the owner of labels behind artists including Taylor Swift, Drake and Billie Eilish at about 56bn.
The company said last week that the proposal "fundamentally and materially undervalues UMG and will not deliver superior value creation".
Dow Jones reported that the bid had also faced opposition from UMG's largest shareholder, France's Bollor Group.
Ackman has held an interest in UMG since 2021 and previously sat on the company's board.
His proposal reportedly involved merging UMG with a publicly traded special purpose acquisition vehicle and shifting its stock market listing from the Netherlands to the US, steps Ackman argued would improve how the market valued the business.
Pershing is expected to make a profit of more than $600m on its Universal Music investment, according to Bloomberg and Dow Jones reports.
UMG's shares have come under pressure amid concern that growth in the music industry is slowing after several strong years driven by streaming services such as Spotify and rising catalogue valuations.
At 0931 BST, shares in Pershing Square Holdings were up 0.71% in London at 3,976p.
Reporting by Josh White for Sharecast.com.