Ackman’s Spac buys 10% of Universal Music for $ 4bn

A white-collar company backed by billionaire Bill Ackman of the hedge fund will buy a 10 percent stake in Universal Music Group, Taylor Swift’s label, for $ 4 billion, it confirmed Sunday.

As part of the transaction, a first of its kind for a special acquisition company, Pershing Square Tontine Holdings, Ackman’s investment vehicle, will distribute the shares to its shareholders only after Vivendi, the French owner of UMG, has completed its planned list of shares in Euronext Amsterdam.

PSTH will continue to exist after the transaction with access to up to $ 2.9 billion in cash, and “intends to pursue a business combination with a company operating promptly.” PSTH said the company’s value of the new deal was 35 billion euros.

Confirmation of the deal, reported earlier this month from the Financial Times, comes when Vivendi is trying to squeeze money out of its lucrative unit amid rising profits in the music business.

The French media group, controlled by billionaire Vincent Bolloré, previously sold 20 percent of Universal to China Tencent.

In an email sent to his staff Sunday, Lucian Grainge, UMG’s chief executive, hailed the deal with Ackman as part of a “new chapter” for the label.

“As you can see from the PSTH announcement, this investment represents a strong validation of UMG, our strategy, our people, our legendary catalog and our incredible list of artists and composers,” he said. written.

“And the fact that we now have, in addition to Vivendi, two committed investors – the consortium led by Tencent, and PSTH – is such a powerful investment that could be imagined by the investment and technology communities.”

PSTH rejected competition from private company Hellman & Friedman, which had offered to buy a 10 per cent stake in Universal at a valuation of € 30 billion.

Music companies have gained value in recent years due to the increase in royalty payments from streaming services like Spotify.

PSTH’s statement indicated UMG’s operating profits grew by more than 20 percent year-on-year since 2017 and the analyst’s expectation for profits of more than 1.5 billion euros in the 2021, a profit margin of 19 percent.

Universal, headquarters of companies including Kanye West and Lady Gaga, command a 30% share of the market, according to estimates by Midia Research.

Spacs are investment vehicles that raise money through public listings to find private companies to take public, even though increased regulatory scrutiny has slowed the number of listings lately.

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