Bill Ackmans SPAC drops $4B Universal Music deal over SEC scrutiny
Billionaire investor Bill Ackman introduced Monday that his company is shedding plans to make use of his SPAC to spend money on Universal Music Group after the Securities and Exchange Commission raised questions over the deal.
Ackman introduced closing month that his SPAC, or special-purpose acquisition corporate, referred to as Pershing Square Tontine Holdings, would purchase a ten % stake in UMG — which is house to Drake, Taylor Swift and Billie Eilish — for $4 billion.
But the billionaire investor mentioned Monday in a letter to shareholders that his funding company’s board had unanimously determined to not continue with the deal after discussions with US regulators.
Our choice to hunt an alternate preliminary trade aggregate (‘IBC’) used to be pushed by way of problems raised by way of the SEC with a number of parts of the proposed transaction particularly, whether or not the construction of our IBC certified beneath the NYSE regulations, Ackman mentioned within the letter, which used to be addressed to shareholders.
Ackman added that Pershing Square will now search a standard SPAC merger. It has 18 months to seek out some other goal until shareholders vote for an extension.
Since the announcement of the proposed take care of UMG closing month, Ackman famous, the inventory worth of his blank-check corporate has fallen 18 %.
He mentioned Pershing Square had underestimated shareholders response to the complexity and construction of the transaction.
The proposed deal took on a rather distinctive construction that set it with the exception of maximum different SPACs, which most often merge with an unlisted trade and take it public.
But Ackman’s NYSE-listed SPAC didnt intend to merge with UMG, however somewhat develop into a shareholder forward of an already-planned list by way of Universal.
In his letter to shareholders Monday, Ackman said shortcomings of the construction of the deal, together with its “affect on traders who’re not able to carry overseas securities, who margin their stocks, or who personal name choices on our inventory.
It stays unclear, even though, what in particular irked officers on the SEC, which has been ramping up scrutiny of SPACs around the board in fresh months after an explosion of the monetary tool during the last 18 months.
Despite the deal falling aside, Ackman added that Vivendi used to be now not being left on the altar,
Ackman mentioned his funding company, Pershing Square Holdings, will as an alternative take a stake in UMG and develop into a long-term shareholder of the corporate.
Universal Music Group’s French proprietor, Vivendi, mentioned in a separate remark that Pershing Square will take a 5 % to ten % stake within the corporate.