Ackman Alters His UMG Strategy
• In early June we first reported that Pershing Square Tontine Holdings, Ltd. (PSTH), a special purpose acquisition company (SPAC), run by hedge-fund billionaire Bill Ackman confirmed that it was in discussions with Vivendi S.E. to acquire 10% of the outstanding Ordinary Shares of Universal Music Group B.V. (UMG). On June 20, the deal, originally estimated to be worth around $4 billion was formalized.
Now comes word that the transaction has taken a turn — the Associated Press reports that Ackman has now decided to pull Pershing Square’s participation and instead use his own investment funds to acquire a 5-10% stake in UMG. In a letter sent Monday to Pershing Square shareholders, Ackman cited questions from the Securities and Exchange Commission (SEC) about whether the structure of a SPAC would allow such an acquisition under the rules of the New York Stock Exchange.
Vivendi confirmed the news in a statement that reads, “Pershing Square Tontine Holdings Ltd. has informed Vivendi that it intends to assign its rights and obligations to acquire 10% of the share capital of Universal Music Group under the agreements announced on June 20, 2021 to investment funds with significant economic interests or management positions held by Mr. William Ackman. Vivendi has decided to approve such request. The condition regarding the exercise by PSTH shareholders of their redemption rights is no longer applicable to the amended transaction, which will only be contingent on the approval of U.S. regulatory authorizations.
In closing, the statement reads, “The equity interest eventually acquired in UMG will now be comprised between 5 and 10%. If it were less than 10%, Vivendi still intends to sell the shortfall to other investors before the distribution of 60% of the share capital of UMG to the shareholders of Vivendi scheduled to occur on September 21, 2021.”
The AP reports that Pershing Square now has 18 months left to close a new transaction, unless shareholders vote for an extension. Ackman said that because of the experience with the proposed UMG transaction, its next business combination would be structured as a conventional SPAC merger.
