Pershing Square Tontine Withdraws from Universal Music Investment

Pershing Square Tontine Holdings Ltd. (PSTH), a blank check company, informed shareholders in a letter that the Board had decided to withdraw from its initial plan to invest 10% in Universal Music Group (UMG), a unit of Vivendi. Shares were down 1% in pre-market trading at the time of writing.

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The deal will now be consummated by William Ackman’s investment funds, Pershing Square Holdings, and affiliates who have also agreed to accept the Vivendi indemnity agreement and PSTH’s transaction costs related to UMG. (See Pershing Square Tontine stock charts on TipRanks)

The deal fell apart as the SEC raised issues that went against NYSE listing rules, and the Board thought that it is in the best interest of the shareholders to find an alternate merger partner.

On June 4, PSTH announced its plan to acquire a 10% stake in UMG, which is slated to go public on Euronext in September 2021. The deal was not structured as a traditional SPAC merger, as PSTH would only invest part of its funds in the UMG acquisition and would still have funds in hand to undertake another potential merger.

Post the withdrawal, PSTH now has 18 months to find and complete another business combination unless otherwise extended by its shareholders. Shares have lost 18% since the announcement of the deal.

The letter stated, “While we are disappointed with this outcome, we continue to believe that the unique scale and favorable structure of PSTH will enable us to find a transaction that meets our standards for business quality, durable growth, and a fair price.”

TipRanks’ Stock Investors tool shows that investors currently have a Very Negative stance on PSTH, with 1.1% of portfolios tracked by TipRanks decreasing their exposure to PSTH stock over the past seven days.