Investor Bill Ackman’s special purpose acquisition company (SPAC) Pershing Square Tontine Holdings said it had dropped a deal to acquire a 10 percent stake in Vivendi’s Universal Music Group.
Vivendi had finalized the deal for the label home of Taylor Swift and Lady Gaga earlier this summer, valuing the music major at €35.0 billion ($41.6 billion).
“Our share price has fallen by 18 percent since the transaction was announced on June 4,” the SPAC said in the Paris morning on Monday after discussions with the U.S. Securities and Exchange Commission, which it said raised issues “with several elements of the proposed transaction – in particular, whether the structure of our initial business combination qualified under the New York Stock Exchange rules.”
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The SPAC added: “While we believe our shareholders recognize UMG’s extraordinary attributes, including its attractive growth characteristics, business quality and superb management team, we underestimated the reaction that some of our shareholders would have to the transaction’s complexity and structure. We also underestimated the transaction’s potential impact on investors who are unable to hold foreign securities, who margin their shares, or who own call options on our stock.”
Vivendi, led by CEO Arnaud de Puyfontaine, has long been planning an initial public offering of the music firm in Amsterdam in September.
Pershing Square highlighted that Vivendi was not being “left at the altar,” saying it would instead plan to buy at least some stake in UMG via Ackman’s other vehicles. “Pershing Square intends to be a long-term UMG shareholder and will endeavor to work with UMG management to help create value for all stakeholders” after its public listing, it said.
Vivendi said the firm would “assign its rights and obligations to acquire 10 percent of the share capital of UMG under the agreements … to investment funds with significant economic interests or management positions held by Mr. William Ackman.” It added: “The equity interest eventually acquired in UMG will now be comprised between 5 and 10 percent. If it were less than 10 percent, Vivendi still intends to sell the shortfall to other investors before the distribution of 60 percent of the share capital of UMG to the shareholders of Vivendi scheduled to occur on Sept. 21.”
