Universal Music Group's share price fell after Bill Ackman's Pershing Square sold its stake valued at over $1.5 billion, exiting the world's largest music company. The fund's investment in the company began five years ago.

During early trading in Europe on Thursday, Universal Music's stock dropped as much as 7.6% to €17.74, extending its year-to-date decline to nearly 20%.

Reports indicate the sale of the fund's remaining shares in Universal Music commenced shortly after the billionaire's hedge fund had a $65 billion acquisition attempt rebuffed. The stake, comprising approximately 80.6 million shares worth well over $1.5 billion, is expected to yield Pershing Square a profit of at least $600 million.

Universal Music, which represents artists including Taylor Swift and Billie Eilish, separately announced it repurchased €250 million of its own shares from Pershing Square. This transaction is part of an existing €500 million buyback program.

The company stated the shares were acquired at a price of €17.66 per share, representing roughly 0.8% of its equity. This price represents an 8% discount to Wednesday's closing price.

Ackman first invested in Universal Music in 2021, prior to its spin-off from French media conglomerate Vivendi and its subsequent listing on Euronext Amsterdam.

Earlier this year, Pershing Square had made an offer to acquire Universal Music, which was rejected by the company's board on the grounds that the valuation was too low. The company's largest shareholder, France's Bollore Group, had expressed opposition to the potential deal.

In a research note, analysts David Vagman and Maxime Stranart from ING Groep NV stated that while Pershing's move was not unexpected following the rejection of its takeover bid, it is nevertheless negative news for the company. They said, "The exit of such a high-profile supporter in itself sends a negative signal."