Hedge-fund billionaire Bill Ackman's Pershing Square Tontine Holdings (PSTH) dropped on Friday after the special purpose acquisition company confirmed it was in talks with French media conglomerate Vivendi to buy a 10% stake in Universal Music Group in a transaction dubbed a SPARC.
Specifically, a separate entity that will be known as Pershing Square SPARC Holdings will issue rights to acquire common stock for $20 a share to Pershing Square Tontine shareholders, called SPARs, which can only be exercised after the special purpose acquisition rights company reaches an agreement for its initial business combination.
Unlike most SPAC business combinations, the deal will involve a SPARC. Unlike a traditional SPAC, a SPARC does not intend to raise capital through an underwritten offering in which investors commit capital without knowing the company with which SPARC it will combine, Pershing Square said.
The SPARs are expected to trade on the New York Stock Exchange and have a term of five years, subject to extension, Pershing Square said.
Universal Music Group “… meets all of our acquisition criteria and investment principles as it is the world’s leading music company, with a royalty on the growing global demand for music,” Ackman said in a statement. “We are delighted to work with Vivendi on this iconic transaction, and look forward to its consummation.”
SPACs in general have gone from Wall Street darlings to has-beens, with May's SPAC activity showing IPOs trading consistently down and deals met with underwhelming investor enthusiasm.
At last check, shares of Pershing Square Tontine were down 11.14% at $22.26.