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What Is a Special Purpose Acquisition Company?

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What is a SPAC?

Special purpose acquisition companies are formed to make acquisitions with their IPO money, typically within two years

Bill Ackman's Pershing Square Tontine Holdings, a blank-check company, has increased the size of its planned initial public offering to $4 billion from $3 billion. The company announced the move in a regulatory filing Monday. It revealed the $3 billion figure last month.

Ackman hasn’t indicated what he wants to buy with the SPAC.

But the company’s filings have cited “mature unicorns,” which are big companies with substantial sales that are backed by venture capital firms.

"We intend to pursue merger opportunities with private, large capitalization, high-quality, growth companies where our ownership in the merged company would generally represent a minority of shares outstanding at the time of the merger," Pershing’s June filing said.

Ackman’s SPAC may ultimately raise as much as $7 billion, including contributions of $1 billion to $3 billion from Pershing Square-associate funds.

Rebecca Rose Woodland discussed the legal definition of a SPAC and what it means in the video above.

Watch the full interview for more. 

You can follow Katherine Ross on Twitter at @byKatherineRoss

Read more from Katherine Ross here.

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