Universal Music to sell half its Spotify stake for buybacks, Q1 hit by weak dollar

Universal Music Group said on Wednesday it would sell half of its equity stake in Spotify and double its share buyback programme, as it reported first-quarter revenue held back by a weaker U.S. dollar. Proceeds from the stake reduction would be used for the buyback and also shared with artists. UMG also planned to launch an additional €500 million share buyback, subject to shareholder approval at its annual general meeting, doubling its total buyback authorisation.

The move comes three weeks after activist investor Bill Ackman made an unsolicited $64 billion bid for UMG, arguing that the market was not fully valuing its 2.7-billion-euro Spotify stake. Ackman proposed selling the holding and using 1.5 billion euros of the proceeds as part of the takeover's cash consideration. The board said it views the shares as undervalued relative to the company's performance and prospects.

First-quarter revenue came in at €2.9 billion ($3.4 billion), flat year-on-year in reported terms but up 8.1% in constant currency. Adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) fell 3.8% to 636 million euros, but rose 3.9% in constant currency. Top sellers in the quarter included BTS, Taylor Swift, Olivia Dean, Morgan Wallen and the K-Pop Demon Hunters soundtrack.