Analysis PSTH.U

Bill Ackman's PSTH terminates Universal Music Group deal


William Ackman is dropping plans to use his SPAC to invest in Universal Music Group, saying the SEC wasn’t convinced the deal met the rules for such vehicles.

Mr. Ackman’s Pershing Square Holdings Ltd. said it would take a Universal stake instead, becoming a long-term investor in the music group. The U-turn is a setback for Mr. Ackman, who won praise for crafting a first-of-its-kind pact that set it apart from a wave of other deals orchestrated recently by SPACs.

In June, Pershing Square said an affiliated SPAC had agreed to buy a 10% stake in Universal from French media conglomerate Vivendi SE for about $4 billion. The deal valued Universal at some $40 billion. Typically, such deals involve a previously listed SPAC, or blank-check company, merging with an unlisted business, taking it public.

Mr. Ackman’s deal was different: NYSE-listed Pershing Square Tontine Holding Ltd. didn’t intend to merge with Universal but instead become a shareholder ahead of an already-planned listing by Universal in the Netherlands. People familiar with the matter said it was structured that way because of tax and legal implications for Vivendi.

The structure was hailed by some as a feat of financial engineering that also freed Mr. Ackman from some of the usual constraints of SPACs.

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