Ackman sees path to possible U.S. listing for Universal, working on next deal
William Ackman, whose blank check acquisition 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 already pushing ahead with his next deal, he told investors on Wednesday.
The billionaire investor who runs hedge fund Pershing Square Capital Management and who raised the biggest-ever special purpose acquisition company (SPAC) nearly a year ago, described UMG as an “incredibly iconic, super durable business,” and said he hoped for a U.S. listing for the world’s biggest music label in the future.
UMG, which is being spun-off by France’s Vivendi (VIV.PA), will complete its planned Euronext Amsterdam listing in late September. Ackman said UMG could be listed in the United States through a direct listing on stock exchanges or through sponsored American Depositary Receipts.
“It is up to the board,” he said, adding that he wants to own a bigger stake in UMG and is in talks to figure out a way of doing so.
On a three-hour call with investors, the Wall Street financier, whose moves are closely watched, said he signed a confidentiality agreement earlier this week for his next deal.
As he walked investors in his SPAC called Pershing Square Tontine Holdings (PSTH) through how the deal with UMG will work, he said he is confident investors will stick with Tontine even if its shares fall below the IPO price.
Earlier in June, Ackman said he would search for another deal through PSTH Remainco with the roughly $1.6 billion that is left after spending about $4 billion on UMG. Pershing Square funds own roughly 29% of Remainco, which has the option of raising an additional $1.4 billion to complete a future deal.
Even as Ackman is completing the first part, he is working on the second part. He said there were several interesting targets and he had signed a confidentiality agreement with one.
At 2 p.m. ET, PSTH shares were down 1.7% at $23.32 a share, compared with $21.10 when it launched in June last year.
For Ackman, the investment in UMG is personal, he said. Nearly 100 years ago, his songwriting grandfather, Herman Ackman, sold lyrics that are now owned by UMG. The company represents popular artists such as Taylor Swift and Lady Gaga.
The deal with UMG capped a global hunt for a suitable target by Ackman, who considered home rental giant Airbnb (ABNB.O) and Southeast Asian ride-hailing and food delivery firm Grab Holdings as targets.
The vehicle ended up being different from most SPACs. They typically are shell companies listed on stock exchanges to raise cash, with the sole purpose of merging with an unknown private company to take 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 rights to buy shares in a Special Purpose Acquisition Rights Company (SPARC) launched by Pershing Square, to do yet another deal down the line.
The SPARC will have $10.6 billion in capital available to spend on a new target. It will have no deadline to spend the money and will eventually be publicly listed, Ackman said.