Bill Ackman's SPAC Buys Into Universal Music Group

Sam Blake

Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake

Bill Ackman's SPAC Buys Into Universal Music Group

Hedge-fund billionaire investor Bill Ackman is getting a 10% share of one of the world's largest music companies, valued at $40 billion, and performing some Wall Street-styled gymnastics to do it.


Ackman launched the largest SPAC ever last summer with the goal of acquiring a "mature unicorn" to take public with his new blank-check company. Those plans have changed. Ackman's SPAC – Pershing Square Tontine Holdings Ltd. – will instead be acquiring a piece of Universal Music Group: a carveout from an already publicly-traded company, Vivendi, which itself was planning on going public.

By doing so, Ackman fulfills his SPAC's obligation to acquire a company within two years. But Tontine will live on, only as a new type of financial entity: a so-called SPARC.

UMG is expected to go public on the Amsterdam-based Euronext exchange later this year.

Tontine will pay about $4 billion for its 10% stake in UMG – the world's largest record label by market share, whose expansive roster includes Kanye West, Lady Gaga and Taylor Swift. UMG's sweeping catalog provides Ackman and his shareholders access to an asset that has steadily been attracting investors, who've paid big sums for music publishing rights as digital music soars.

The deal must still be approved by shareholders of UMG's parent company Vivendi. A vote is scheduled for Tuesday.

Meanwhile, the deal meets Ackman's acquisition obligation, and leaves him flush with about $2.9 billion in cash still available to the blank-check company. Tontine will continue searching for another acquisition target, according to a company statement.

Shareholders will get a slice of UMG along with rights to purchase shares of a future acquisition, under the arrangement that inspired the term SPARC, or special purpose acquisition rights corporation. Those rights, or warrants, are expected to be tradeable on the NYSE or Nasdaq, Tontine said.

The financial engineering puts a spin on the SPAC, one of the hottest Wall Street trends of late.

Tontine said it was attracted to UMG's 5% revenue growth in 2020, when streaming proved resilient during the pandemic. Music streaming comprises the majority of UMG's revenues.

Competitor Warner Music Group went public in 2020 at a market value of $15.6 billion. That provided a tidy sum to Len Blavatnik, who bought WMG for $3.3 billion in 2011.

Tontine's 10% stake in UMG is expected to settle within a few weeks.

Shares in Tontine closed flat Monday at $22.70. They fell sharply, however – about 13% – when news first surfaced earlier this month that it was exploring a 10% UMG acquisition.

"During the course of our negotiations with Vivendi, it became clear that various tax, legal and other strategic considerations precluded Vivendi from entering into a 'traditional' de-SPAC merger transaction, and from selling more than 10% of UMG," the Tontine announcement said. "Even with the additional complexity, time, legal, and other costs that these constraints created, we were convinced that the opportunity to acquire such an extraordinary business was the best option for our shareholders."

Tontine will hold a livestream presentation and Q&A about the deal on Wednesday.

https://twitter.com/hisamblake
samblake@dot.la

Subscribe to our newsletter to catch every headline.

Cadence

How Real-Time Data Is Helping Physicians Track Their Patients, One Heartbeat at a Time

S.C. Stuart
S.C. Stuart is a foreign correspondent (ELLE China, Esquire Latin America), Contributing Writer at Ziff Davis PCMag, and consults as a futurist for Hollywood Studios. Previously, S.C. was the head of digital at Hearst Magazines International while serving as a Non-Executive Director, UK Trade & Investment (US) and Digital Advisor at The Smithsonian.
How Real-Time Data Is Helping Physicians Track Their Patients, One Heartbeat at a Time

Are you a human node on a health-based digital network?

According to research from Insider Intelligence, the U.S. smart wearable user market is poised to grow 25.5% in 2023. Which is to say, there are an increasing number of Angelenos walking around this city whose vital signs can be tracked day and night via their doctor's digital device. If you've signed up to a health-based portal via a workplace insurance scheme, or through a primary care provider's portal which utilizes Google Fit, you’re one of them.

Do you know your baseline health status and resting heartbeat? Can you track your pulse, and take your own blood pressure? Have you received genetic counseling based on the sequencing of your genome? Do you avoid dairy because it bloats, or because you know you possess the variant that indicates lactose intolerance?

Read moreShow less

Who Will Win LA's E-scooter Wars?

Maylin Tu
Maylin Tu is a freelance writer who lives in L.A. She writes about scooters, bikes and micro-mobility. Find her hovering by the cheese at your next local tech mixer.
Who Will Win LA's E-scooter Wars?
Evan Xie

Los Angeles — it’s not just beautiful weather, traffic and the Hollywood Walk of Fame — it’s also the largest shared micromobility market in the U.S. with six operators permitted to deploy up to 6,000 vehicles each.

And despite the open market policy, the competition shows no signs of slowing down.

Read moreShow less
RELATEDEDITOR'S PICKS
LA TECH JOBS
interchangeLA
Trending