The potential transaction would value the home of Taylor Swift, Drake and Billie Eilish at 35 billion euros ($42.4 billion) including debt, Vivendi said in a statement on Friday, above the 30 billion-euro valuation ascribed to the business in 2019 when China’s Tencent Holdings Ltd. acquired a stake.

Ackman’s special purpose acquisition company, called Pershing Square Tontine Holdings Ltd., raised $4 billion in a July initial public offering — a record-setting amount for a SPAC. Such firms go public and then find promising companies to merge with.

The music industry has rebounded from a decade-long slump thanks to surging revenue from streaming services, and Vivendi has sought to squeeze more value from UMG — especially after suffering declines in its advertising and publishing operations.

Vivendi plans to distribute 60% of the music business to its shareholders later this year and list it in Amsterdam. That deal is due to be approved by shareholders later this month.

Vivendi said Pershing Square funds and their affiliates have indicated that they may acquire further exposure to UMG by buying Vivendi securities or UMG securities following the spinoff.

Going public could give UMG more financial clout to compete with rivals Warner Music Group Corp. and Sony Music Entertainment. Vivendi had originally planned a 2023 IPO for UMG, but said earlier this year that it was now aiming for the business to go public by the end of 2021.

Vivendi shares were little changed as of 10:12 a.m. in Paris.

Streaming Slows

If the potential Pershing deal and the spinoff go ahead, it would leave Vivendi with no more than 10% of UMG, although Vivendi’s controlling shareholder — French billionaire Vincent Bollore — will hold an additional stake in the music business via his family’s holding companies.

It would also leave UMG with an investment base in the world’s three big economic regions — the U.S., Europe and Asia.

After cementing its dominance of the industry under veteran Chief Executive Officer Lucian Grainge, UMG will need to work harder to keep growing as the boom in subscription streaming starts leveling off and the company looks for further growth in Asian markets, where music piracy is still a problem.

The big music companies aim to keep profits rising by monetizing their enormous back catalogs via deals for everyone from video game makers to YouTube fitness coaches to use their tunes.

Smaller independent companies are luring artists away from the big majors by offering them distribution, marketing and rights management services deals, while allowing the musicians to keep control over their output.

Activist hedge fund Bluebell Capital Partners has asked French market regulators to investigate Vivendi’s spinoff plan, saying it hasn’t been straight with shareholders over key terms of the deal and that its plan precludes other ways to engineer the separation that would be more tax efficient.

Bollore has built his fortune through canny investments and complex deals that allowed him to pull the strings without being forced to bid for overall control of the companies. Bluebell said in a letter to the regulator last week there’s a risk Vivendi may eventually allow Bollore to strengthen his control over UMG.