Bill Ackman's Pershing Square proposed merging its acquisition vehicle with Universal Music Group in a $64.31 billion deal aimed at reviving the music label's value.
The cash-and-shares offer values Universal Music at 30.40 euros per share, representing a 78% premium to recent prices.
UMG owns recording artists including Taylor Swift, Billie Eilish and Drake. The Amsterdam-listed company's shares jumped 13% following the announcement.
Pershing Square hopes a New York Stock Exchange listing will boost UMG's share price and liquidity. The deal would merge SPARC Holdings with Universal Music into a new entity called Nevada Corporation.
UMG management receives praise for running a strong business, though share performance has lagged since 2021 due to Bollore Group's 18% stake and delayed U.S. listing plans.
UMG shareholders would receive 9.4 billion euros in cash plus 0.77 shares in Nevada Corporation for each UMG share held. Michael Ovitz joins as board chairman.
The transaction expects completion by year-end. Pershing Square holds a 4.7% stake in UMG, making it the fourth-largest shareholder.