Billionaire investor Bill Ackman confirmed Friday that his blank-check company Pershing Square Tontine Holdings is in talks to buy a 10 percent stake of Universal Music Group for about $4 billion.
The transaction would value the Vivendi-owned Universal Music, home to singers like Taylor Swift, Lady Gaga and Kanye West, at around $42.4 billion, making it the largest target ever for a special purpose acquisition company, or SPAC.
The deal is a structured stock purchase, according to Ackman, and would not result in a merger. As a result, Universal would continue as planned to list on the Euronext Amsterdam exchange in the third quarter of 2021.
French media giant Vivendi is the majority owner of Universal Music, the world’s biggest music label. Chinese tech company Tencent is a minority stakeholder.
“Universal Music Group is one of the greatest businesses in the world,” said Ackman. “Led by Sir Lucian Grainge, it has one of the most outstanding management teams that I have ever encountered.
“Importantly, UMG meets all of our acquisition criteria and investment principles as it is the world’s leading music company, with a royalty on the growing global demand for music. We are delighted to work with Vivendi on this iconic transaction, and look forward to its consummation.”
In the last year, there has been a frenzy of SPAC deals, but the market has cooled somewhat as the Securities and Exchange Commission has opened an inquiry into the activity in recent months.
Pershing Square’s SPAC has been one of the more closely watched as it raised $4 billion in July 2020 in what was at the time the biggest listing by a blank-check firm.
Vivendi, which confirmed talks with the SPAC, owns 80 percent of Universal. The company said in May it had already flagged that it could sell an additional 10 percent of the group to a US investor prior to the IPO.
According to Reuters, bringing in Ackman will diminish the stakes held by Vivendi, at the end of the distribution-in-kind, giving Vivendi 10 percent, Pershing 10 percent, Vivendi owner Vincent Bolloré 16 percent and the Tencent-led consortium 20 percent.
Vivendi shareholders are set to vote on the deal at a June 22 investor meeting. Meanwhile, even before news of the SPAC, activist hedge fund Bluebell has called on French market watchdogs to examine disclosures around the IPO, Reuters said.