FILE PHOTO: William ‘Invoice’ Ackman, CEO and Portfolio Supervisor of Pershing Sq. Capital Administration, speaks in the course of the Sohn Funding Convention in New York Metropolis, U.S., Could 8, 2017. REUTERS/Brendan McDermid
June 4, 2021
By Svea Herbst-Bayliss, Anirban Sen and Mathieu Rosemain
(Reuters) -William Ackman’s Pershing Sq. Tontine Holdings stated on Friday it was in talks to purchase 10% of Common Music Group at a 35 billion euro ($42 billion) valuation, in a departure from the playbook of particular function acquisition corporations (SPACs).
Tontine turned the most important ever SPAC when it raised $4 billion in an preliminary public providing (IPO) final summer season, with Ackman’s hedge fund Pershing Sq. committing a minimal of a further $1 billion.
It did so to take an organization public. But Common is already within the means of being listed in Amsterdam by its French mum or dad Vivendi SA, and it’ll not depend on Tontine to go public, as most corporations do of their SPAC offers.
As an alternative, Tontine shareholders will obtain Common shares as soon as the music label’s inventory market flotation is accomplished. Tontine will stick with it in quest of one other deal, with $1.5 billion in capital left to deploy. Tontine buyers may even obtain warrants in a brand new blank-check firm launched by Ackman that may pursue one other, yet-to-be-determined deal.
The weird deal would cap a worldwide hunt for an acceptable goal by Ackman, who beforehand flirted with residence rental large Airbnb and Southeast Asian ride-hailing and meals supply agency Seize Holdings as targets.
Tontine’s shares had been buying and selling down greater than 14% at $21.51 in afternoon buying and selling on Friday, as buyers fretted over whether or not the SPAC was providing Common too excessive a valuation.
The nearer Tontine’s shares commerce to its $20 IPO worth, the upper the prospect that SPAC buyers will select to redeem their shares, taking away cash that Pershing Sq. would use to fund the deal. Pershing Sq. stated on Friday it will backstop any potential financing hole with its different funds.
Pershing Sq. stated it will make investments $4 billion to purchase the Common stake. Buyers within the SPAC will get Common shares when they’re listed, however won’t be able to train their present warrants. Buyers may even get rights to purchase shares in a Particular Goal Acquisition Rights Firm (SPARC) launched by Pershing Sq., to do one more deal down the road.
The SPARC could have $10.6 billion in capital obtainable to spend on a brand new goal. It can don’t have any deadline to spend the cash and can turn into publicly listed down the road, Ackman stated.
Ackman added that he plans to make a full presentation on the deal as soon as it has been finalized in a couple of weeks.
A frenzy of SPAC listings in america has seen over $300 billion raised by the itemizing of blank-check acquisition automobiles in 2020 and 2021, in accordance with Refinitiv knowledge.
The SPAC itemizing frenzy has cooled in latest months, with new issuance dropping dramatically and present clean examine automobiles buying and selling down as the next rate of interest atmosphere harm urge for food for riskier investments. The IPOX SPAC index is down 23% from its February peak.
Vivendi, managed by French billionaire Vincent Bollore, has benefited from rising streaming revenues on the world’s greatest music label, which is behind artists reminiscent of Taylor Swift and Girl Gaga.
It has already offered chunks of Common Music to a consortium led by Chinese language large Tencent, and plans to checklist Common in Amsterdam by September as a part of a two-step transaction to distribute 60% of the label to present buyers.
Goldman Sachs in April raised its estimate of Common’s valuation to 44 billion euros, amid a quicker shift to music streaming.
With about 2 billion euros of debt for Common, the implied fairness worth for the music label is roughly 33 billion euros, alongside the traces of the valuation given by Vivendi final month, Bernstein stated in a be aware.
“Common Music Group is among the best companies on the earth,” Ackman stated in a press release.
A Vivendi spokesman confirmed on Friday there have been no modifications to the plans for a Common IPO by Sept. 27 after the take care of Ackman. The corporate, which owns 80% of Common, had already flagged it might promote a further 10% of the group to an American investor previous to the IPO.
Bringing in Ackman will diminish the stakes held by Vivendi, on the finish of the distribution-in-kind, giving Vivendi 10%, Pershing Sq. 10%, Bollore 16% and the Tencent-led consortium 20%.
Vivendi shareholders are on account of vote on the transaction at a June 22 investor assembly.
The Common IPO plan has raised hackles of activist fund Bluebell, nonetheless, which stated it penalized minority shareholders because the distribution-in-kind construction was not tax environment friendly.
Bluebell, which has declined to disclose the dimensions of its stake in Vivendi, has referred to as on France’s markets watchdog to look at disclosures across the deal.
($1 = 0.8258 euros)
(Reporting by Svea Herbst-Bayliss, Anirban Sen, Krystal Hu and Mathieu Rosemain; Extra reporting by Eva Mathews in Bengaluru, Gwenaelle Barzic and Sarah White in Paris, Abhinav Ramnarayan in LondonEditing by Greg Roumeliotis and Cynthia Osterman)