Bill Ackman's SPAC ($PSTH) is finally closing in on a home after nearly a year long hunt. The target is the world's largest music group, Universal Music Group ("UMG"). The deal would be the largest SPAC transaction ever and will value UMG at $40 billion. (Current #1 is Grab Holdings' $35 billon SPAC).
UMG is a subsidiary of French media company, Vivendi SE, and is the record label behind artists such Taylor Swift, Lady Gaga and the Weeknd. Their classic acts list is not that bad either with names such as Queen, Beatles and Bob Dylan. Pro forma for the deal Bill Ackman would own 10%, Vivendi 70% and Chinese internet conglomerate, Tencent with the remainder 20%.
Bill Ackman raised this $4 billion SPAC, Pershing Square Tontine Holdings, last July, and since then had us all playing guessing games who the lucky winner would be. This is also not Bill's first SPAC. He helped co-found one in 2012, with which he helped take Burger King public. Bill has recently shifted his activist focus, from attacking management teams (just ask Herbalife) to more peaceful and friendlier investments such as Starbucks.
Short Squeez Takeaway: There was a lot of speculation that Bill Ackman's SPAC would be picking up Stripe. The market was left disappointed by UMG and $PSTH was down 5% since the news broke. While UMG is no Stripe, it does give Bill Ackman a front seat in the glittery world of music, and a company with €7.4 billion in revenue and streaming tailwinds behind it.