Billionaire William Ackman’s Pershing Square Tontine Holdings is in talks to buy 10 percent of Universal Music Group in a deal that would value the label at $40 billion and make it the largest ever investment by a blank check vehicle, Reuters reports.
Pershing would invest $4 billion to buy the Universal stake, making it the largest target for a SPAC, trumping Southeast Asian ride-hailing and food delivery firm Grab Holdings’s SPAC deal.
Pershing Square issued a press release confirming talks are in the works.
Investors don’t seem impressed. Pershing fell as much as 11.6% today after confirming it is in talks to reach a deal with Universal Music.
The New York Times’ DealBook outlined why this is a SPAC deal like no other:
- Ackman’s hedge fund would end up owning 29 percent of the SPARC (a Special Purpose Acquisition Rights Company), giving it a greater percentage of the vehicle than it had in the original SPAC.
- SPAC investors would receive a stake in the new SPARC, which unlike SPACs won’t have a two-year time limit to find a deal. When all is said and done, the new SPARC could have up to $10.6 billion to spend on a new takeover.
- Investors won’t get a vote on the SPAC’s Universal deal — if one is reached — or whatever future transaction the SPARC makes. And there’s no guarantee that the SPARC will find a suitable deal, especially since Pershing Square Tontine had struggled to identify a suitable target.
Vivendi, controlled by French billionaire Vincent Bollore, has benefited from growing streaming revenues at the world’s biggest music label, which is behind artists such as Taylor Swift and Lady Gaga. Read more.
