Bill Ackman’s SPAC in talks to buy 10% stake in Universal Music

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Jun 4, 2021
  • PSTH deal values Universal Music Group at about $42.4 billion.
  • The investment will be the largest ever by a blank check company.
  • PSTH shares opened more than 10% down in the stock market.

In an announcement on Friday, Bill Ackman’s Pershing Square Tontine Holdings Ltd (NYSE: PSTH) confirmed it was in talks to get a 10% stake in Universal Music Group for roughly $4 billion (£2.82 billion), which will be the biggest investment ever by a blank check company. The deal values the Santa Monica-based music corporation at about $42.4 billion.

In April 2021, the special purpose acquisition company (SPAC) Altimeter Growth Corp announced a merger with Grab that valued the largest ride-hailing and food delivery company in Southeast Asia at over $30 billion. According to SPAC Research, it is so far the largest SPAC merger in history.

Ackman’s Pershing Square is not interested in a merger

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PSTH highlighted on Friday that it was not interested in a merger, and the deal will not affect Universal Music’s plan to list its shares on Euronext Amsterdam later this year in the third quarter. The global music company is backed by Vivendi (French media conglomerate) as the majority owner and Tencent (Chinese tech giant) as the minority shareholder.

Vivendi SE shares touched an intraday high of $35.95 in the morning session on Friday. It, however, slipped to $35.24 per share in the afternoon. Vivendi had started the year 2021 at a per-share price of $32.06.

As per Midia Research estimate, Universal Music is the world’s largest record label. Home to notable acts like Taylor Swift, Drake, and The Beatles, it currently has a market share of close to 30%. PSTH has valued Universal Music sharply higher than $7.91 billion, where SoftBank had tried to buy the music company in 2013. 

Hellman & Friedman also wanted to get a 10% stake in Universal Music

Ackman trumped Hellman & Friedman’s (private equity firm) bid for a 10% stake in Universal Music at a valuation of $36.51 billion. The final terms of the SPAC deal could take days to weeks to be disclosed, as per people with knowledge of the matter. The news comes a month after the billionaire hedge fund investor sold shares of Starbucks and bought Domino’s Pizza stock.

PSTH shares opened more than 10% down in the stock market on Friday to trade at $22.30 per share. On a year-to-date basis, it is now over 15% down. Ackman’s SPAC debuted on the New York Stock Exchange last year in September at a per-share price of $21.60. At the time of writing, it is valued at $4.43 billion.

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