FILE PHOTO: The brand of Common Music Group (UMG) is seen at a constructing in Zurich, Switzerland July 25, 2016. REUTERS/Arnd Wiegmann
July 19, 2021
PARIS (Reuters) -Billionaire investor Invoice Ackman will purchase as much as 10% of Vivendi’s Common Music Group by his most important hedge fund, relatively than a particular function acquisition firm (SPAC), after traders and regulators questioned his use of a SPAC.
The funding comes forward of a plan to listing and spin-off 60% of Common to Vivendi shareholders, because the French group, managed by tycoon Vincent Bollore, cashes in on the streaming growth and the lure of stars similar to Taylor Swift.
The transaction has attracted large traders together with China’s Tencent, however Ackman’s determination to make use of a SPAC to purchase a minority stake raised eyebrows from the get go, after deviating from the same old funding sample for such automobiles.
Helped by simple financial circumstances, Wall Road and European markets are skilled a growth in these so-called clean cheque corporations, designed to snap up complete non-public companies and take them public with out the extra onerous guidelines connected to listings.
Pershing Sq. Tontine Holdings (PSTH), Ackman’s SPAC, stated in a press release the U.S. Securities and Alternate Fee (SEC) had raised points with a number of components of the deal, with out disclosing them.
Some traders had additionally queried the transaction, with PSTH shares falling 18% because it was introduced, regardless of Common’s attraction. Ackman had described Common as an “extremely iconic, tremendous sturdy enterprise”, and his funding had valued the music label group at 35 billion euros ($41 billion) together with debt.
“We underestimated the response that a few of our shareholders must the transaction’s complexity and construction,” Ackman stated in a PSTH launch.
Pershing Sq., Ackman’s most important hedge fund, will now exchange PSTH because the investor.
“Our counterparty was not left on the altar,” Ackman added.
The overhaul is a blow to the largest ever SPAC, after PSTH raised $4 billion in an preliminary public providing (IPO) final summer time. It stated it now had 18 months to search out one other goal, or it has to return funds to its traders.
Amid the SPAC deal frenzy, the SEC has begun to probe a number of facets of the automobiles, together with the best way they’re marketed and challenge development forecasts, and potential conflicts of curiosity amongst their advisers.
Jefferies analysts stated the $4 billion Common funding could be a giant outlay for Ackman’s most important Pershing Sq. fund, however may very well be co-financed.
Ackman has revealed a private motivation for supporting Common too, linked to his songwriting grandfather, Herman Ackman, who offered lyrics that are actually owned by the music group.
Vivendi stated in a separate assertion that Pershing Sq.’s funding would probably quantity to between 5% and 10% of Common’s capital, including it might open it as much as different traders to make up the shortfall had been it lower than 10%.
($1 = 1.1805 euros)
(Reporting by Sudip Kar-Gupta, Sarah White and Mathieu RosemainEditing by Edmund Blair and Mark Potter)