Bill Ackman’s SPAC is close to a $40 billion deal with Universal Music

By Lauren Hirsch and Kate Kelly

The billionaire William Ackman has finally found his match.

Mr. Ackman’s special purpose acquisition company is nearing a deal to take a 10 percent stake in the Universal Music Group that would value the company behind Taylor Swift, Lady Gaga and Kendrick Lamar at about $40 billion, two people briefed on the situation said.

The deal could be announced in the next few weeks, though it is not final and could still fall apart, said the people, who requested anonymity because the talks are confidential.

Special purpose acquisition companies, more commonly known as SPACs, use capital from the public market to invest in a private company, taking it public in the process. Mr. Ackman’s SPAC, Pershing Square Tontine Holdings, has been on the prowl for a target since raising $4 billion through an initial public stock offering in July. While it was one of hundreds of SPACs started last year, its large size made guessing which company it would finally make a deal with a popular game across Wall Street. A broader pullback in SPACs amid heightened regulatory scrutiny added to the interest.

“We’ve been working on a transaction since early November,” Mr. Ackman said at a Wall Street Journal conference last month. “We’re either going to get a transaction done in the next relative short term — weeks — or we’ll be onto the next one.” He said the deal was with an iconic private company and it would be complex.

The Universal Music Group is backed by the French media giant Vivendi, which has said it plans to take the music business public by the end of this year. Other investors include the Chinese internet company Tencent, which announced in January that it had increased its stake in Universal to 20 percent in a deal that valued the company at 30 billion euros ($24.4 billion).

The size of a SPAC is only loosely related to that of its target. Additional funding arranged alongside a merger allows SPACs to take on bigger targets.

Singapore’s Grab, which offers ride hailing, grocery delivery and other services, announced a SPAC deal in April that valued it at $39.6 billion, making it the largest SPAC transaction to date.

The Wall Street Journal reported the deal talks earlier.

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