Billionaire investor Bill Ackman’s blank-check company Pershing Square Tontine Holdings (NYSE:PSTH) is in talks to buy 10% of Universal Music Group for $4 billion U.S.
The deal values Universal Music at 35 billion euros ($42.4 billion U.S.), PSTH said in a written statement. French media company Vivendi is the majority owner of Universal Music. Chinese technology company Tencent is a minority stakeholder in the company.
Vivendi’s stock price rose a slight 0.48% on news of the deal.
PSTH was previously reported to be taking Universal Music Group public in what would be the largest special purpose acquisition company (SPAC) deal ever. However, the 10% stake that PSTH takes in Universal Music Group will not lead to the company going public via a SPAC.
Under terms of the deal, Universal Music will proceed with a planned listing on the Euronext Amsterdam stock exchange in the third quarter of this year.
So called “blank-check companies” are usually formed to raise funds through an IPO to finance a merger or acquisition, typically within two years.
Southeast Asia’s ride-hailing giant Grab’s SPAC merger with Altimeter Growth Corp. is the largest SPAC merger announced to date. That deal values Grab at more than $30 billion U.S.
The SPAC market hit a roadblock on the regulatory front as the Securities and Exchange Commission (SEC) proposed an accounting rule change that would classify SPAC warrants as liabilities instead of equity instruments.
SPAC issuance has slowed down in recent months after a record first quarter. A total of 151 SPAC initial public offerings have already been completed in 2021, raising $47.6 billion U.S.
The proprietary CNBC SPAC 50 index, which tracks the 50 largest U.S.-based pre-merger blank-check deals by market cap, has erased its 2021 gains amid heightened regulatory scrutiny and is trading 4% lower on the year.