SPAC, Pershing Square, Universal Music Group – call points:
- Pershing Square Tontine Holdings is giving up 10% of its universal music acquisition
- Pershing Square Holdings now acquires a 5-10% stake in Universal
- Bill Ackman identified increased SEC control as the main driver of the changed approach
Pershing Square Tontine Holdings, a vehicle for acquiring blank checks operated by billionaire investor Bill Ackman, supported the proposed merger of SPAC with Universal Music Group, citing regulatory scrutiny. Following discussions with the US Securities and Exchange Commission (SEC), the Supervisory Board of Pershing Square Tontine Holdings decided unanimously to suspend discussions. In June, it was announced that Bill Ackman’s SPAC had agreed to acquire 10% of Universal for a total of $ 4 billion. The announcement gave Universal Music Group an estimated company value of $ 41.55 billion.
SPAC summary chart
Chart courtesy of SPAC Analytics
In a letter to shareholders, Ackman highlighted the regulatory issues that plagued the proposed transaction. “Our decision to seek an alternative initial business combination (” IBC “) was prompted by the concerns raised by the SEC about several elements of the proposed transaction – particularly whether our IBC structure complies with NYSE rules …” Ackman said. Following the announcement of the merger, Pershing Square Tontine Holdings shares have shaved nearly 20%. As a result of the SPAC merger, Ackman’s Pershing Square hedge fund will acquire a 5-10% stake.
SPAC activity table
SPAC Analytics Consent
The failed deal comes when Gary Gensler, the new chairman of the SEC, has spoken out loud about the vague nature of SPAC transactions, as the new administration seems intent on squeezing its power over the securities industry. Gensler has said in statements and comments that SPAC transactions require greater oversight and transparency. However, the flow of transactions has remained strong despite regulatory pressure from the SEC. In 2021, SPAC IPOs accounted for 65% of all US IPOs and 53% of total IPO revenues collected. The numbers indicate a sharp increase from year to year, a trend that has attracted the attention of financial regulators.
SPAK ETF daily schedule
The chart is provided by TradingView
When the “retail” of stock markets lands, the investment products that dominated the headlines have cooled, with the exception of SPACs. SPAK, an actively managed ETF that monitors post-merger companies for two years, is 37% lower than its recent all-time high since February. Other speculative behaviors, such as meme stocks and option activity, have also declined as broader markets digest growth problems and COVID recovers.
– Written Brendan Fagan, DailyFX intern
To contact Brendan, use the comments section below or @BrendanFaganFX Twitter