Bill Ackman's SPAC Withdraws Plan to Acquire Stake in Universal Music

SEC, Doubts Raised on Acquisition Plan Lead to Deal Collapse
Ackman to Acquire Shares Directly via Hedge Fund

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] Pershing Square Tontine Holdings, a special purpose acquisition company (SPAC) founded by hedge fund mogul Bill Ackman, has canceled its agreement to acquire a 10% stake in Universal Music, the world's largest music label.

On the 19th (local time), according to CNBC, Pershing Square Tontine Holdings, the SPAC established by Bill Ackman's hedge fund Pershing Square, announced that its board of directors decided to withdraw from the Universal Music acquisition.

This decision came after the U.S. Securities and Exchange Commission (SEC) raised concerns that Pershing Square Tontine's plan to acquire Universal Music might not comply with the New York Stock Exchange (NYSE) regulations.

Previously, Pershing Square Tontine had agreed last month to acquire a 10% stake in Universal Music, a subsidiary of the French media group Vivendi, for approximately $4 billion.

Bill Ackman [Photo by AP Yonhap News]

However, the deal fell through after the SEC expressed the opinion that Pershing Square Tontine's alternative business combination (IBC) structure might not be suitable under NYSE rules.

Additionally, there is analysis that the decline in investor enthusiasm for SPAC investments also influenced the withdrawal of the acquisition plan.

Pershing Square Tontine's stock price dropped about 18% following the announcement of the Universal Music acquisition.

In a statement, Ackman said, "We underestimated investors' reactions to the complex acquisition plan related to the Universal Music merger," and added, "We also failed to consider the situations of some investors who find it difficult to hold foreign stocks."

Instead, Ackman announced plans to acquire a stake in Universal Music directly through his hedge fund Pershing Square.

Previously, Pershing Square Tontine had decided to apply a method of acquiring only a portion of Universal Music's shares, which were already scheduled to be listed, rather than the typical SPAC merger method of a 1-to-1 merger with an unlisted company.

The background for pursuing this acquisition plan is analyzed to be due to Universal Music's very high corporate value, making it difficult to acquire the entire company.

Despite the failed acquisition, Pershing Square stated that it will continue to pursue traditional SPAC mergers and that there are 18 months left to close a new deal if shareholders do not vote for an extension.

Ackman expressed disappointment with the outcome but remained optimistic, saying that considering the size and favorable structure of Pershing Square Tontine, they will be able to find a deal that meets their standards.

This content was produced with the assistance of AI translation services.