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Bill Ackman’s SPAC Proposes Unique Deal With Universal Music Group

This Friday, Billionaire investor Bill Ackman’s SPAC Pershing Square Tontine Holdings (NYSE: PSTH) has confirmed to be engaged in talks with Universal Music Group to buy a 10% stake for around $4 billion, valuing the company at a total of $42.4 billion.

According to PSTH, the deal would not result in a merger and the Universal Music Group will still conduct its intended listing on Euronext Amsterdam in the third quarter of 2021.

This deal, if completed, would be the largest SPAC deal so far and also a rather unique one, as it would result in three separately traded entities, including a new Special Purpose Acquisition Rights Company (SPARC).

Currently the Universal Music Group is owned by French media conglomerate Vivendi (XPAR: VIV) at a majority stake and Tencent (HKSE: 0700) at a minority stake.

Following UMG’s listing the 10% of UMG Ordinary Shares purchased from Vivendi, which at cost represents approximately $14.75 per PSTH share, would be distributed to existing PSTH shareholders.

The remaining pro-rata share of PSTH (PSTH Remainco), will have approximately $5.25 in cash per share and one transferable five-year right per share of Pershing Square SPARC Holdings Ltd. (“Pershing SPARC”), which is expected to trade on the New York Stock Exchange.

PSTH has slipped around 12% today, illustrating a distaste of investors for this particular deal. What do you think about this deal? Would you have liked PSTH to be linked to a different target company? Drop your thoughts in the comments.


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