Ackman’s SPAC confirms talks to buy 10% stake in Universal Music
Bill Ackman’s Pershing Square has confirmed it is in talks to buy a 10% stake in Universal Music Group. Yahoo Finance’s Adam Shapiro and Julia La Roche discuss.
Video Transcript
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ADAM SHAPIRO: So the world is talking about the latest deal that Bill Ackman has struck. Pershing Square Tontine Holdings is going to purchase, what is it? 10% of Universal Music Group. It's a $4 billion purchase. It values Universal Music at $42 billion. Julia La Roche, when I think Universal Music, I don't think about them, I think about Lady Gaga, Taylor Swift. I mean, they have huge musicians, as well as Queen and the Beatles, right?
JULIA LA ROCHE: Well, look, this is a fascinating deal, and probably not the one that a lot of folks were expecting from Bill Ackman's Pershing Square Tontine Holdings, because it's not your traditional SPAC deal here. Rather than an actual traditional merger, the shareholders of Pershing Square Tontine Holdings will receive shares in Universal Music Group. But it's interesting, because I followed Bill Ackman for a long time, and to be clear, we haven't heard from him beyond the press release here.
But he is kind of known for his investment framework of how he likes to look for these cash flow generative companies with outstanding managements, with high barriers to entry, those sorts of things. But he did tout the irreplaceable intellectual property owned by this company, also its must-have content, and what he sees as many years of growth globally as more consumers adopt streaming. So we could talk about that part of the deal. But also, there's some more complex things we could dig into here as well, Adam.
ADAM SHAPIRO: Well, forget complexity, right, because this company, I think Vivendi is the majority owner. But it's going to list publicly still in Amsterdam. So I mean, look, Bill Ackman is certainly an accomplished investor. There's a play here. It doesn't sound like he's going to be short term on it, or what do you think?
JULIA LA ROCHE: No. And actually, if you read the, so if you read the document that came out overnight from Bill, the reason I say it's complex is, OK, this isn't the traditional one we were thinking of. It's not a traditional merger. They'll be part of that listing. They'll have 10% of those shares that Pershing Square Tontine Holdings will have acquired for its shareholders. Now, Pershing Square Tontine Holdings will continue to trade. It will be listed under the kind of SPAC rules, so you won't think of it as a traditional SPAC, but it'll have $1.5 billion or so in cash. And it will still look for another deal. It'll be a smaller deal, but that is another thing to look for.
And if you also pay attention to Bill Ackman on Twitter, some of his followers, they've asked him, like look, for us loyal Pershing Square Tontine Holding shareholders, we'd like, they wanted to have access to a Pershing Square Tontine too. And kind of buried in this release, Bill Ackman tweeted last night, we've got the technology. I was trying to figure out, what's this talking about?
He's talking about access to a newly formed Pershing Square SPARK. Holding. SPARK is not a SPAC, it's a Special Purpose Acquisition Rights Company. It doesn't intend to raise capital through the traditional underwriting process, but it will issue rights to those current Pershing Square Tontine shareholders. I guess they get the rights to get in on this one at I guess the IPO price, which would normally be reserved for kind of institutions, high net worth individuals. So seems to me that Bill Ackman is very much on the hunt for more deals down the line here.
ADAM SHAPIRO: It sounds like he's on the hunt for more deals, but I'm the same age. I don't think I'm as smart as he is, but I'm still trying--
JULIA LA ROCHE: Well, you haven't heard from him yet.
ADAM SHAPIRO: Look at it. Right. But I'm trying to put, you know, old school parameters around this, like content is king kind of situation, where that doesn't seem to be the way to approach it. Anyway, we're going to--
JULIA LA ROCHE: So, yeah, I don't, it's hard to say, because I can't really put myself in his shoes, other than like, he did tout in the press release some of the, I guess through his own investing framework. But at this point, look, Pershing Square Tontine shares are down about 10% following this announcement. And I think a lot of folks are pretty eager to hear from him.
ADAM SHAPIRO: Yeah. I bet you get the first interview. All right, we're going to have to take a look at, well, you can see there that the Pershing Holdings is down right now. But let's take a look at the overall markets, because when we come back, we want to revisit how this latest Labor Department jobs report is impacting markets. Right now, there are a lot of people yesterday saying we would go into Friday with a sell-off going into the weekend. That doesn't seem to be the case yet. Dow is up about 84 points. We're going to revisit all of this right after the commercial break.
