Ackman Rewrites the SPAC "Merger", De-SPACs are Heating Up

SPAC momentum may be back with 3 new mergers announced, highlighted by Pershing Square's unique deal to buy 10% of UMG, while Chamath hit the pipeline with 4 new SPAC S-1s focused on Biotech.
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The SPAC market started the week on a bit of snoozer coming off of the Memorial Day holiday, with no deal announcements or priced IPOs until Thursday. Overall, the week ended with 3 new mergers announced*, highlighted by the massive (and complicated) Pershing Square/Universal Music transaction (see below). 6 new S-1s, including 4 from Chamath, and no new IPOs priced. 

De-SPACs are the name of the game now, as 4 new companies De-SPAC'ed this week, with two additional votes on Friday. June is set up to be a busy merger vote/de-spac month as there are currently at least 20 SPACs scheduled to vote on their business combinations the rest of this month. 

On the whole, SPACs remain discounted, with the average Pre-Deal SPAC trading at a discounted $9.82 - and remains a solid risk reward play, particularly given De-SPACs trading better than before. 

A rundown on the week that was, in SPACs...

Ackman Stuns with PSTH 
Bill Ackman stunned the SPAC world on Friday with the proposed (in discussions) deal to buy 10% of Universal Music Group. You can read an overview of the deal structure here - but, essentially the transaction will result in 3 separate traded securities for PSTH shareholders:

  1. Shares in Universal Music Group, once it lists on Euronext
  2. Shares in PSTH RemainCo, which will be a pool of ~$1.5B that will operate as a SPAC (but not technically be one)
  3. Rights to buy shares in a Special Acquisition Rights Company, which will have between $6-10B to search for a target, but not be confined to a 2 year deadline

Takeaway
When PSTH went public in July 2020, and raised $4B in the largest SPAC IPO ever, it did so with the intention of targeting a "mature unicorn." There is speculation that PSTH was targeting companies like Bloomberg, Stripe, or Airbnb... but that did not come to fruition. So, perhaps a $4B SPAC pool was simply too large - quite possibly there were not enough (willing) targets of a big enough size for $4B. 

Thus, by using the $4B to pay for 10% of UMG, and meeting the SPAC's initial business combination criteria, PSTH RemainCo can operate as a smaller, though still sizable at $1.5B, non-SPAC SPAC (say that 5 times fast). Couple that with PSTH raising another SPAC, the SPARC, alongside - allows PSTH another potential pool of capital for more deals. 

Time will tell how the market, and shareholders, will ultimately determine the utility of this trade. PSTH closed the day down -11.94% to $22.06 - tho still above the tender value of $20.

Weekly Rundown of SPAC Activity

New SPAC Mergers

PSTH, KURI, GIG

PSTH, KURI, GIG

*note that the PSTH deal is not officially announced yet, but confirmed in discussion

New SPAC IPOs

None

New SPAC S-1s

6 filed for over $1B, highlighted by Chamath's 4 new Biotech SPACs with Suvretta. 

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De-SPACs

4 new companies officially De-SPAC'ed this week, trading under their new tickers. While another 2, GIX and DFHT, passed their votes today and expect to trade under their new tickers next week. 

We've seen De-SPACs performing better - and reminder in the long run they haven't been as bad as the narrative may suggest. 

LTCH, CANO, BARK, SOFI

LTCH, CANO, BARK, SOFI

In fact, if you look at the newly released De-SPAC ETF from Tuttle Capital, made up of the largest 25 recent de-spacs, DSPC is up ~+16%. 

Next Week's Votes

Jun 11 | $ 18.96 | ACTC - ArcLight Clean Transition Corp --> Proterra Inc
Jun 10 | $ 17.20 | SSPK - Silver Spike Acquisition Corp. --> WM Holding Company, LLC
Jun 10 | $ 10.08 | CCX - Churchill Capital Corp II --> Software Luxembourg Holding S.A
Jun 10 | $ 10.00 | VGAC - VG Acquisition Corp --> 23andMe, Inc.
Jun 09 | $ 10.09 | THBR - Thunder Bridge Acquisition II, Ltd --> Indie Semiconductor
Jun 09 | $ 9.99 | CAPA - HighCape Capital Acquisition Corp --> Quantum-Si
Jun 08 | $ 10.12 | ARYA - Arya Sciences Acquisition Corp III --> Nautilus Biotechnology, Inc.
Jun 07 | $ 13.81 | FSRV - FinServ Acquisition Corp --> Katapult Inc.

Today's Biggest Gainers

8.85% ~ $ 14.02 | CLII - Climate Change Crisis Real Impact I Acquisition Corp (Announced)
6.56% ~ $ 14.29 | LACQ - Leisure Acquisition Corp. (Announced)
6.05% ~ $ 14.02 | PSAC - Property Solutions Acquisition Corp (Announced)
6.02% ~ $ 11.09 | PDAC - Peridot Acquisition Corp (Announced)
5.52% ~ $ 17.20 | SSPK - Silver Spike Acquisition Corp. (Announced)
4.80% ~ $ 10.27 | GTPA - Gores Technology Partners, Inc (Pre-Deal)
4.31% ~ $ 23.95 | CCIV - Churchill Capital Corp IV (Announced)
3.50% ~ $ 12.73 | FTIV - FinTech Acquisition Corp. IV (Announced)
3.21% ~ $ 12.47 | CMII - CM Life Sciences II Inc. (Announced)
2.67% ~ $ 15.02 | RSVA - Rodgers Silicon Valley Acquisition Corp (Announced)
2.52% ~ $ 10.57 | BTWN - Bridgetown Holdings Ltd (Pre-Deal)
2.37% ~ $ 10.38 | GSAH - GS Acquisition Holdings Corp II (Pre-Deal)
2.31% ~ $ 11.98 | CMLF - CM Life Sciences Inc (Announced)
2.21% ~ $ 18.96 | ACTC - ArcLight Clean Transition Corp (Announced)
2.13% ~ $ 10.30 | CMLT - CM Life Sciences III Inc. (Pre-Deal)
1.99% ~ $ 10.00 | NGC - Northern Genesis Acquisition Corp. III (Pre-Deal)
1.85% ~ $ 10.48 | RACA - Therapeutics Acquisition Corp (Announced)

Today's Biggest Losers

-11.94% ~ $ 22.06 | PSTH - Pershing Square Tontine Holdings (Announced)
-3.84% ~ $ 11.27 | SRAC - Stable Road Acquisition Corp. (Announced)
-3.33% ~ $ 13.05 | TPGY - TPG Pace Beneficial Finance Corp (Announced)
-3.30% ~ $ 9.67 | FRWA - PWP Forward Acquisition Corp. I (Pre-Deal)
-2.82% ~ $ 10.00 | RACB - Research Alliance Corp. II (Pre-Deal)
-1.49% ~ $ 9.26 | GIX - GigCapital2, Inc. (Announced)
-1.45% ~ $ 10.20 | ARYD - ARYA Sciences Acquisition Corp IV (Pre-Deal)
-1.44% ~ $ 10.28 | AGCB - Altimeter Growth Corp. 2 (Pre-Deal)
-1.42% ~ $ 13.21 | JIH - Juniper Industrial Holdings, Inc. (Announced)
-1.38% ~ $ 10.00 | PACE - TPG Pace Tech Opportunities Corp (Announced)
-1.32% ~ $ 14.92 | DFHT - Deerfield Healthcare Technology Acquisitions Corp. (Announced)
-1.28% ~ $ 9.99 | CAPA - HighCape Capital Acquisition Corp (Announced)
-1.25% ~ $ 12.63 | FST - FAST ACQ CP (Announced)
-1.23% ~ $ 9.67 | NAAC - North Atlantic Acquisition Corporation (Pre-Deal)
-1.22% ~ $ 9.73 | SSAA - Science Strategic Acquisition Corp. Alpha (Pre-Deal)
-1.17% ~ $ 10.14 | FTOC - FTAC Olympus Acquisition Corp (Announced)
-1.12% ~ $ 9.75 | SPKB - Silver Spike Acquisition Corp II (Pre-Deal)
-1.04% ~ $ 9.63 | VELO - Velocity Acquisition Corp (Pre-Deal)
-1.02% ~ $ 9.67 | PPGH - Poema Global Holdings Corp. (Pre-Deal)

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report.)