Ackman sees path to possible U.S. listing for Universal, works on next deal
BOSTON, June 23 (Reuters) – William Ackman, whose blank check acquiring company struck a deal to buy 10% of Universal Music Group (UMG) last week, is exploring options to increase his stake in the music label and is already moving forward with its next deal, he told investors on Wednesday.
The billionaire investor who runs hedge fund Pershing Square Capital Management and who raised the world’s largest Special Purpose Acquisition Company (SPAC) nearly a year ago, described UMG as an “amazingly iconic and super company. lasting, ”and said he was hoping for a US list for the world’s biggest music label in the future.
UMG, which is being spun off by the French Vivendi (VIV.PA), will complete its scheduled listing on Euronext Amsterdam at the end of September. Ackman said UMG could be listed in the United States through a direct stock exchange listing or through sponsored U.S. certificates of deposit.
“It’s on the board,” he said, adding that he wanted to have a bigger stake in UMG and was in talks to find a way to do so.
On a three-hour call with investors, the Wall Street financier, whose movements are closely watched, said it signed a confidentiality agreement earlier this week for its next deal.
As he explained to investors at his SPAC called Pershing Square Tontine Holdings (PSTH) how the deal with UMG worked, he said he was confident investors would remain loyal to Tontine even if his shares fell below the IPO price.
Earlier in June, Ackman said he would seek another deal through PSTH Remainco with the roughly $ 1.6 billion remaining after spending around $ 4 billion on UMG. Pershing Square funds own around 29% of Remainco, which has the potential to raise an additional $ 1.4 billion to close a future deal.
Even as Ackman finishes part one, he’s working on part two. He said there were several interesting targets and he had signed a confidentiality agreement with one of them.
As of 2 p.m. ET, PSTH shares were down 1.7% to $ 23.32 per share, from $ 21.10 when it launched in June last year.
For Ackman, investing in UMG is personal, he said. Almost 100 years ago, his songwriter grandfather, Herman Ackman, sold lyrics that now belong to UMG. The company represents popular artists such as Taylor Swift and Lady Gaga.
The deal with UMG capped a global search for a suitable target by Ackman, who considered home rental giant Airbnb (ABNB.O) and Southeast Asia food transportation and delivery company Grab Holdings as targets.
The vehicle ended up being different from most SAVS. They are usually shell companies listed on the stock exchange to raise funds, with the sole purpose of merging with an unknown private company to make it public.
Investors in Ackman’s SPAC will get Universal shares when they are listed, but will not be able to exercise their current warrants. Investors will also get the right to buy shares in a Special Purpose Acquisition Rights Company (SPARC) started by Pershing Square, to close another down-the-line transaction.
SPARC will have $ 10.6 billion in capital to devote to a new target. It won’t have a deadline to spend the money and will eventually go public, Ackman said.
Report by Svea Herbst-Bayliss
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