Hedge fund manager Bill Ackman was all over it after the disturbances in Amsterdam after the Ajax-Maccabi Tel Aviv match: the Amsterdam listing of Universal Music Group. As far as he was concerned, it should be scrapped as soon as possible and the stock traded exclusively on the US market. But as is often the case in corporate law, what matters here is not just what you want, but mainly what is possible within the framework of laws and regulations.
The idea seems simple: Ackman is convinced that an exclusive listing in the US can increase UMG's value. Moreover, according to Ackman, since that night Amsterdam has been a terrible place he wants nothing to do with. Or as he himself put it, ‘By leaving a jurisdiction that fails to protect its tourists and minority groups, we combine both good business and moral principles.’
But, delisting, or delisting, requires more than a persuasive or emotional story.
Majority decides
A delisting in Amsterdam requires several legal and practical requirements to be met, the most important of which is shareholder consent. Ackman may want a delisting, but he only owns 10% of UMG shares through Pershing Square (of which he owns only 20%). A majority of UMG shareholders will have to agree, and that is not a given. In fact, many European shareholders value access to the Amsterdam stock exchange.
A previously negotiated contractual opportunity for a New York listing does offer him an opportunity to move trading in some of the shares. He has, through the company Pershing Square, a right called IPO Registration Demand, for selling his shares on the US stock exchange, provided they raise at least half a billion dollars. But, that will not get him off the Dutch listing. And besides, he wants more than just that.
Moving headquarters
According to Ackman, the current headquarters should also move from Hilversum to the US. But even with a listing on the US stock exchange, this is not a given. Again, as a minority shareholder, he has to comply with the majority. In doing so, this move also requires board approval. Approval that, given their reaction to this ‘proposal’, is not going to happen for now.
And that none of this was (easily) possible he not only could have known, he probably knew. But the newspapers were full of it, allowing Bill (who, by the way, indicated yesterday that he would buy back 100 million of his own shares, including on the Amsterdam stock exchange) to make his point of principle.
