Bill Ackman’s SPAC Pershing Square Tontine filed details of its tender offer to purchase and redeem all shares of its common stock at $20.0113 per share.
Shares last traded at $22.07 before the redemption offer began. Shareholders who redeem under the tender offer potentially stand to receive less money than if they sell the stock on the NYSE, although the SPAC highlighted some of the potential advantages of redeeming.
The purpose of the tender offer is for the SPAC to acquire 10% of the ordinary shares of Universal Music Group from Vivendi for an aggregate purchase price of nearly $4 billion, and to distribute the UMG shares to the SPAC’s stockholders.
Because the deal with Universal Music Group involves a stock purchase, the SPAC is not required to put the matter to a shareholder vote.
Following the tender offer and purchase of the 10% stake in UMG:
- 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.
