环球音乐集团：潘兴广场的提议是有益的警醒，但建议可在现有结构下实现

Christophe Cherblanc+41 582 723 540christophe.cherblanc@bernsteinsg.com Annick Maas+44 20 7676 6683annick.maas@bernsteinsg.com Christopher Pancur+44 20 7676 7280christopher.pancur@bernsteinsg.com Price Target UMG.NA UMG: Pershing Square is a welcome wake-up call, but proposalscan be achieved in the current structure “The Easter Bunny is proof that magic hops into our lives when we least expect it” Pershing Square 7 April proposal is based on hard to dispute facts: the share price isdepressed despite consistent topline and bottom line delivery (we agree), the capital allocationframework needs to be explained better (we agree), and there is room for balance sheetoptimization, notably with Spotify stake disposal and buybacks (we half agree). With an offerreliant on a “new” UMG re rating, the real question for investors (and the board) is whether anyof PS proposals cannot be implemented in the current structure Investment Implications Why an offer?Pershing Square believes the current “issues” can be addressed by a mergerwith PS SPARC Holdings (“New UMG”) to be listed on the NYSE. The offer includes €5.05in cash and 0.77 shares in New UMG for each share of UMG. New UMG will have 1.541bnshares outstanding after the cancellation of 17% of UMG outstanding shares. The €9.4bncash portion will be funded with €2.5bn from Pershing Square including €1.05bn fromSPARC’s rights holders, €5.4bn in additional investment grade debt (cap 2.5 x ND/ AdjustedEBITDA) and €1.5bn of net proceeds from the net monetization of the stake in Spotify. Path to €30.4 : It is all about re-ratingThe €30.4 offer price relies at 85% on a 0.77"new" UMG share. The new share is deemed worth €25.34 based on a target 25x P/Eapplied to a PS’ estimated 2027 €1.32 EPS (new EPS post buyback, and after share basedcompensation). A further P/E expansion to 30x is expected within 5 years. What will the new structure bring to the party? What cannot be done in the currentstructure?PS insists that “none of the (...) issues relate to the company’s execution”.Inshort, the offer is predicated on rerating to 25x PE because of a "new" approach.A legitimate investor push back and a critical matter for the board will be why all PershingSquare proposals cannot be implemented in the existing structure. Especially as topmanagement would remain unchanged based on mention of a "new contract" for CEOSir Lucian Grainge. We note it is unclear at this stage whether Sir Lucian or other majorshareholders (V. Bollore, Vivendi) support or not the Pershing Square initiative, DETAILS 6 Mar 2026 - UMG : Underwhelming FY25 operating leverage and cash conversion...but improving industry backdrop in 202628 Nov 2025 - Week End Media Blast: Why my Associate does not know Earth, Wind & Fire...but likes France Gall5 Nov 2025 - The Long View: Challenging AI concerns - Trust and ROI beat "wow" effect30 Oct 2025 - UMG 3Q25: Delivering the goods - Accelerating on AI & IP protection31 Jul 2025 - UMG: Zooming out from the quarterly volatility integral to the Music industry22 Jul 2025 - Quick Take: UMG - Towards a potential US listing 18 Jun 2025 - Universal Music Group (UMG): Operating in a sweet spot is great — Graduating into a best-in-class status is even EXHIBIT 1:The issues identified by Pershing Square Source: Pershing Square EXHIBIT 2:Components of the €30.4 per share offer EXHIBIT 3:Pershing Square view of the “new” UMG : P/E expansion to 25x EXHIBIT 4:...and P/E expansion to continue according to Pershing Square APPENDIX - FINANCIAL FORECASTS BERNSTEIN TICKER TABLE I. REQUIRED DISCLOSURES References to "Bernstein" or the “Firm” in these disclosures relate to the following entities: Bernstein Institutional Services LLC(April 1, 2024 onwards), Sanford C. Bernstein & Co., LLC (pre April 1, 2024), Bernstein Autonomous LLP, BSG France S.A. (April 1,2024 onwards), Sanford C. Bernstein (Hong Kong) Limited盛博香港有限公司,Sanford C. Bernstein (Canada) Limited, SanfordC. Bernstein (India) Private Limited (SEBI registration no. INH000006378), Sanford C. Bernstein (Singapore) Private Limited,Sanford C. Bernstein Japan KK(サンフォード・C・バーンスタイン株式会社)and analysts employed by Société GénéraleAfrica Technologies & Services to produce Bernstein research under a Global Services Agreement in place between Bernsteinand Société Générale. Bernstein is part of a joint venture between Société Générale (SG) and AllianceBernstein, L.P. (AB). Unless specifically notedotherwise, for purposes of these disclosures, references to Bernstein’s “affiliates” relate to both SG and AB and their respectiveaffiliates. VALUATION METHODOLOGY Universal Music Group Our €29 PT is based on a DCF valuation (wacc 7.8%, LT growth 3.3%), including the value of minorities stakes in Spotify andTencent Music. RISKS Universal Music Group Downside risks: Music streaming platforms holding prices flat for an extended period, volatility of hard to predict Physical sales,potential cyclicality of ad revenues (12% of group total)