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Universal Music Group (UMG) took another step toward becoming a publicly traded company in the United States last week following a push by one of its biggest shareholders. But if they are already publicly traded in Amsterdam, why list in the United States, too? 
The reasons for being traded in Europe versus the U.S. are part ideological, part financial, and the effects of listing shares to be traded on multiple stock exchanges — a secondary listing  — could increase UMG’s value.    

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Below is a brief explainer on what led up to the move and the reasons behind it. 

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Where is UMG listed now?  

UMG listed on the Euronext stock exchange in Amsterdam on Sept. 21, 2021, after splitting off from the French conglomerate Vivendi. Unlike a typical IPO, Vivendi structured UMG’s stock debut in a way that allowed Vivendi to retain 10% of the stock, Pershing Square to hold 10%, a Tencent Corp-led consortium to hold another 20% and for the remaining 60% to be distributed to Vivendi shareholders. Paris-based Vivendi chose the pan-European stock exchange Euronext, which is domiciled in Amsterdam but has other locations, and also chose Amsterdam as UMG’s official headquarters. Sources say Vivendi may have chosen Euronext because post-Brexit policies that banned European Union-based financial institutions from trading in London had boosted Amsterdam’s trading business. In January 2021, Amsterdam surpassed London to become Europe’s largest share trading center.  

Why is UMG listing in the U.S.? 

In short, because Bill Ackman, former UMG board member and founder of hedge fund Pershing Square Capital Holdings, is pushing them to — though company insiders say the idea has been discussed before.  

On Nov. 8, 2024, Ackman said Pershing Square, which at the time owned 10.25% of UMG’s stock, would exercise its right to require UMG to register with the U.S. Securities and Exchange Commission (SEC) in a post on X. While Ackman’s post included a condemnation of violent attacks on fans of an Israeli soccer team after a match in Amsterdam, that was not the sole motivation behind his argument.  

Ackman argued that UMG “trades at a large discount to its intrinsic value with limited liquidity in significant part due to it not having its primary listing” in the U.S. In 2023, U.S. stock markets were the primary trading place for 79 of the world’s most valuable companies — companies with a market capitalization of more than 100 billion euros ($116 billion). Those mega market capitalization stocks drove 50% of daily trade turnover, according to a report by Euronext researchers. By contrast, the report found European stock markets were home to 20 companies of similar size, and the daily average volume of trading in the U.S. was 4.4 times higher than on European markets. 

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While four institutional investors control more than half of UMG’s stock, a substantial portion of the company’s shares are available to trade, according to a source. Ackman argued that “float” would trade more frequently and be more liquid if it were available to the world’s largest population of retail investors, mutual funds and exchange-traded funds on a U.S. stock exchange. Sources think that UMG’s longstanding presence in Los Angeles and the iconic artists on its label will give it valuable brand recognition with investors.  

What other companies have done this? 

Listing shares on additional stock exchanges is a financial move that other multinational entertainment companies like Alibaba and Tencent Music Entertainment have used. Tencent Music Entertainment, which launched its IPO on the New York Stock Exchange in 2018, listed shares on the Hong Kong Stock Exchange in 2022. Some U.S. lawmakers at the time were calling for Chinese companies to be de-listed — essentially banned — from American stock exchanges, and the Hong Kong stock exchange eased rules to allow U.S.-listed companies to list shares there.

What will change? 

Because UMG will remain primarily traded and domiciled in the Netherlands, it is not required to comply with most of the U.S. SEC’s rules around financial disclosure. In other words, it is unlikely that the company will release more financial information than is already required by European Union regulators. The most likely near-term effects for the company will be somewhat higher legal and securities-related fees, sources say. Longer-term, Ackman and other investors hope UMG’s share price will increase.  

What happens next?  

As part of calling for UMG to register with the SEC, Pershing was required to sell a minimum of $500 million worth of stock, a requirement it has completed after reductions in its holdings that were disclosed in January and March. Ackman’s capital interest in the company is now less than 5%, according to UMG’s website.  In addition, UMG said in a press release last week that it has taken the first step with the SEC to issue a public offering of “ordinary shares held by certain shareholders.” The company may ultimately list all of its shares on a U.S. market pending SEC approval. While UMG has earlier said it planned to list the shares by Sept. 15, the timetable depends on when the company gets SEC approval.