Hedge fund billionaire Bill Ackman faces record deal with Universal

Enlarge image

Universal star Billie Eilish:

The music company is facing a billion-

dollar

deal

with

Bill Ackman's

Spac Pershing Square Tontine Holdings

Photo: ETIENNE LAURENT / EPA-EFE / REX

The great euphoria about the business with wallet jackets called Spac is noticeably waning on Wall Street, as the deal that hedge fund billionaire

Bill Ackman

(55) is currently threading seems almost like a stopgap solution despite its record dimensions: Like the "Wall Street Journal" reports, Ackman may be on the verge of acquiring his Spac Pershing Square Tontine Holdings in Universal Music Group.

The deal would mean that the world's largest music company would be valued at a total of 40 billion dollars, according to the "WSJ".

It would therefore be the largest Spac transaction that has ever taken place.

Background:

Read everything about "Special Purpose Acquisition Companies", so-called Spacs

According to the newspaper, both sides confirmed the negotiations without giving details.

It could be concluded within a few weeks, according to the "WSJ".

The transaction could also fail.

Enlarge image

Universal in sight:

hedge fund billionaire

Bill Ackman

Photo: Brendan McDermid / REUTERS

However, insiders have apparently learned that the structure of the planned Pershing Universal Deal has already been designed in great detail. Accordingly, Ackmans Spac should not - as usual - acquire the entire company and put it on the stock exchange in this way. Rather, Pershing wants to acquire only 10 percent of Universal with the four billion dollars that Ackman collected from investors last year. So it comes to the valuation of Universal with 40 billion dollars (around 33 billion euros).

As also reported in the Wall Street Journal, Ackman's plans differ from conventional Spac acquisitions in other ways.

So - unlike usual - there are no plans to let the Pershing investors vote on the deal.

Rather, investors should only have the opportunity to return their shares for $ 20 apiece if they do not agree with the project.

Ackman invents the "Sparc"

In addition, unlike other Spacs, Pershing Square Tontine Holdings will continue to exist as an independent listed company, reports the "WSJ". And: According to the newspaper, hedge fund billionaire Ackman has invented another new type of financial vehicle called the "Special Purpose Acquisition Rights Company" ("Sparc"), whose shares are to be offered to Pershing investors.

So all in all, a complicated transaction that Ackman is planning. Some observers are already praising the investment professional for having rewritten "the book of financial engineering". Others consider the difficult-to-understand plan to be a concession to the plight in which Ackman and Pershing Square Tontine Holdings are increasingly finding themselves: For months, Wall Street has been speculating into which company the four billion dollars from Ackman's Spac will flow. At times, prominent names such as the vacation rental broker Airbnb or the media group Bloomberg were in discussion. In view of the ambitious hopes, the shares of Pershing-Spac were at times around 25 percent above their issue price.

At the same time, the euphoria for the Spac investment type overall on the US market has subsided sharply in recent weeks.

The share prices of many of the papers fell below their issue price.

According to the "Wall Street Journal", some observers therefore consider Ackman's universal plans to be a compromise with which the celebrity investor wants to free himself from his predicament caused by the high expectations, the negative market development and the time running out.

Spacs generally have two years to find a suitable takeover target.

In any case, investors are apparently not very enthusiastic about Ackman's plans.

Following the announcement of the plans, Pershing Square Tontine Holding's share price fell around 12 percent to around $ 22 on Friday - just above its $ 20 IPO last July.

For Universal, however, which made around 7.4 billion euros in sales in 202 and has artists such as the musicians

Lady Gaga

(35),

Taylor Swift

(31) and

Billie Eilish

(19) under contract, the deal would only be a stop on the way the stock exchange.

The parent company Vivendi had already made the music subsidiary's IPO plans public earlier and wants to hold on to them even after a possible Pershing transaction, writes the "WSJ".

Vivendi wants to bring 60 percent to the stock market.

The Chinese tech group Tencent has held a further 20 percent for a long time.

The remaining 20 percent would be split up in the future: Vivendi will keep 10 percent and Pershing will take over 10 percent - if everything goes as planned.

cr