Bill Ackman's Pershing Square Tontine Holdings
Ackman was attempting something unusual with his SPAC. SPACs are a blank check company, used to take a private company public. Ackman's SPAC was unusual in that he had a $4 billion blank check. This already limited his investment options given that there are so few private companies of this size. Many speculated that Ackman was focused on taking the fintech company, Stripe, public through his SPAC, and this was seemingly confirmed by Ackman following Stripe's founders on social media and trips made by his private jet.
However, the deal never materialized. Instead, Ackman pivoted and decided that he would do multiple deals within his SPAC. Pershing Square Tontine Holdings' Board of Directors unanimously agreed that it wouldn't go ahead with the deal after discussions with the SEC. Ackman added that his SPAC would continue hunting for targets and pursue a more traditional deal.
Basically, by pursuing multiple deals through one SPAC, the SEC indicated that Ackman's plans for his SPAC would be a violation of New York Stock Exchange rules as the SPAC would essentially be a fund. It wasn't a surprise for many veteran Wall Street analysts who have been suspicious of SPACs and believed that Ackman's SPAC would essentially create a conflict of interest with his current investors.
Of course, this complicates things for Pershing Square Tontine Holdings shareholders, however, many might be relieved as the initial reaction to the Universal Music Group deal had been poor as the stock is 25% lower since the deal was announced. And, it's down 40% since the frenzy in SPACs peaked in mid-February.
Of course, Ackman will still invest in Universal Music Group through his hedge fund. It remains a high-quality asset given that it represents some of the highest-profile musicians and owns song catalogs from some of the most iconic artists. Already, concerts are starting and benefitting from pent-up demand.
