SPAC engineering reaches new heights as scrapped deal sends pharma firm’s stock plunging 36%

Pharma worker
Pharma worker

  • After a novel SPAC buyback deal imploded, shares of clinical-stage biopharma company Immunovant plunged as much as 35.7% on Tuesday, according to a Bloomberg report.
  • The deal collapsed on Monday, sending shares in Immunovant tumbling below $7 on Tuesday from above $10 last week.
  • Exotic SPAC deals have at times received the regulatory side-eye.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

After a novel SPAC buyback deal imploded, shares of clinical-stage biopharma company Immunovant plunged as much as 35.7% on Tuesday, according to a Bloomberg report.

Drugmaker Roviant Sciences had been plotting a new type of SPAC deal – whereby it would use the proceeds from its own SPAC to take over Immunovant, a former subsidiary that had gone public via SPAC in 2019.

The mind-bending deal, according to Bloomberg, collapsed on Monday after Roviant announced it would simply go public via SPAC, without any of the other maneuvers. Instead of taking over Immunovant, Roviant will invest $200 million in the company through stock purchases, according to statements from both firms.

The news sent Immunovant stock tumbling below $7 on Tuesday from above $10 before the weekend. Shares were worth more than $50 late last year.

“Roivant and Immunovant explored a range of possible transactions over the past few months, including a potential acquisition by Roivant of the minority interest in Immunovant, and ultimately agreed on this significant investment,” said Matt Gline, Roivant’s CEO, in a statement. Immunovant’s CEO added that the $200 million would go toward drug development.

Exotic SPAC deals have at times received the regulatory side-eye. In July, legendary investor Bill Ackman dropped plans to use his SPAC to buy shares in Universal Music Group after the SEC said he was venturing into uncharted legal territory.

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Bill Ackman’s PSTH scraps Universal Music deal after SEC pushback -but the billionaire investor is still buying a stake

Ackman, Bill Ackman
Bill Ackman.

  • Bill Ackman’s PSTH won’t buy 10% of Universal Music for about $4 billion after SEC pushback.
  • The billionaire investor’s Pershing Square funds will purchase a stake in Universal instead.
  • PSTH now plans to pursue a conventional SPAC transaction.
  • See more stories on Insider’s business page.

Bill Ackman has scrapped his plan to buy 10% of Universal Music for $4 billion using his special-purpose acquisition company (SPAC) after federal regulators poured cold water on the proposed transaction, the billionaire investor told Pershing Square Tontine Holdings (PSTH) shareholders in a letter on Monday.

PSTH will transfer its share-purchase agreement to Ackman’s Pershing Square company and its affiliates, the investor wrote. That way, he still becomes a shareholder and Universal-owner Vivendi won’t be “left at the altar,” he added.

The SPAC’s board unanimously decided on Sunday to ditch the Universal deal after speaking to the SEC and realizing the agency would probably nix it. PSTH’s directors will now focus on completing a conventional SPAC deal, and have 18 months to close one unless shareholders vote for an extension.

Ackman was caught off guard by the backlash from some PSTH shareholders to the complexity and structure of the original deal, he noted in his letter. The investor also underestimated its potential impact on investors who can’t hold foreign securities, margin their shares, or own call options on PSTH stock, he added.

Before the SEC dashed his hopes, Ackman envisaged PSTH shareholders receiving Universal shares after Vivendi takes the division public this September, continuing to own PSTH stock while the SPAC sniffs out a merger free of the usual time constraints, and securing rights to buy shares in a new investment vehicle called a SPARC once it agrees its own transaction.

PSTH’s withdrawal from the Universal deal will disappoint some of Ackman’s fans, who spent seven months speculating about the identity of his acquisition target. Others who weren’t thrilled at the Universal deal might welcome the SPAC hitting the reset button on its search.

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Billionaire investor Bill Ackman trumpeted his Universal Music deal, nodded to his Reddit fans, and invited company sellers to call him in a presentation this week. Here are the 8 best quotes.

Bill Ackman, Ackman, William Ackman
Bill Ackman.

  • Bill Ackman dug into his $4 billion deal to buy 10% of Universal Music in a presentation this week.
  • The hedge fund manager emphasized music’s timeless appeal and lauded the group’s CEO.
  • Ackman also mentioned his Reddit fanbase and discussed his proposed SPARC investment vehicle.
  • See more stories on Insider’s business page.

Billionaire investor Bill Ackman touted his recent deal to buy 10% of Universal Music Group for $4 billion in a presentation on Wednesday. He underscored the power of the music publisher’s business model, ranked its boss among the best CEOs in modern history, and tipped his hat to the Reddit users who cheered him on while he worked to close the transaction.

The Pershing Square Tontine Holdings (PSTH) boss also emphasized the lasting appeal of music, explained the key strengths of his planned special-purpose acquisition rights company (SPARC), and invited private companies that fit his requirements to call him if they want to go public.

Here are Ackman’s eight best quotes from the presentation, lightly edited and condensed for clarity:

1. “We got our first meeting and it was love at first sight. We dug in and really stopped looking at other opportunities because we had found our target.” – discussing the start of talks with Universal about eight months ago.

2. “It was a bit like the dog that grabbed the bumper of the car and wouldn’t let go because this was precisely what were were looking for.” – underscoring how well Universal fit Pershing’s criteria.

3. “If you own Universal Music Group, you own a royalty on people listening to music. I can’t think of an asset that I have more confidence in it being consumed over time, other than food and water. But the difference with music is you can create IP that you can license to others.”

4. “Think about the iconic CEOs that will be remembered. Think about Walt Disney, think about Steve Jobs. Lucian is an executive who will be remembered for his contribution to this industry. He’s a tremendous human being.” – praising Universal CEO Lucian Grainge.

5. “You don’t need to go hire a ton of developers; everyone wants to be a rock star. There are a lot of entrepreneurs working really hard pitching Universal and hoping Universal will back them in their careers. They want Universal because Universal has had better success than anyone else in making you a star.” – explaining why Universal has a better business model than a typical software company.

6. “Analysts value these interests at anywhere between $2 billion and $4 billion if you were to liquidate them all tomorrow. We’re getting those investments ‘free’ and that’s always a good price.” – commenting on Universal’s investments in Spotify and Tencent Music.

7. “There are some excellent analysts on Reddit. There is a community of people that are studying this company.” – nodding to the members of the r/PSTH subreddit who have been closely following his deal since last year.

8. “It takes away the shot clock from us. We’re never going to put money to work because we’re under pressure, but I don’t like that people are waiting for us to do something and their money is sitting there. I feel that burden and this removes that burden.” – highlighting a key advantage of his proposed SPARC vehicle, which differs from a SPAC because it won’t tap investors for cash until it has struck a deal.

9. “If someone needs $1.5 billion to $3 billion and wants to go public tomorrow, call me.” – Ackman emphasized that businesses need to meet Pershing Square’s criteria.

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Hedge fund manager Bill Ackman’s mega-SPAC seals $4 billion deal to buy 10% of Universal Music

bill ackman
Bill Ackman.

  • Bill Ackman has agreed a deal to buy 10% of Universal Music Group for about $4 billion.
  • Ackman’s Pershing Square Tontine Holdings will remain a public company following the transaction.
  • Shareholders are set to have UMG and PSTH shares plus the chance to back a new investment vehicle.
  • See more stories on Insider’s business page.

Bill Ackman’s pitch to buy 10% of Universal Music Group (UMG) for about $4 billion has been accepted, the billionaire investor announced on Sunday. He also confirmed his intention to pursue two more multibillion-dollar deals, paving the way for fresh intrigue after seven months of speculation about his original target.

Ackman’s Pershing Square Tontine Holdings (PSTH), a special-purpose acquisition company (SPAC), will purchase the minority stake in Drake and Billie Eilish’s record label from its parent company, Vivendi. The French media conglomerate intends to list UMG on the Euronext Amsterdam Exchange in September, and PSTH shareholders are set to receive their shares in the music group before the year ends.

“When the transaction is completed, our shareholders will directly own 10% of the common stock of an independent, publicly traded, large capitalization, extraordinary business with a superb management team,” Ackman and his team wrote in a presentation about the deal.

Unusually, PSTH will remain a public company after the transaction, and seek to deploy as much as $2.9 billion on another business combination. Ackman and his team are already searching for a compelling target, they said.

PSTH shareholders are set to receive UMG shares, continue to own PSTH shares, and will also be handed warrants to buy shares of a special-purpose acquisition rights company (SPARC) for $20 a pop. The SPARC, which hasn’t been approved by regulators yet, could be armed with up to $10.6 billion to pursue a separate business combination.

Ackman’s SPARC is similar to a SPAC, but it doesn’t let investors buy its shares until it has struck a deal. As a result, it doesn’t tie up their capital while it searches for a business combination, and also escapes the pressure of having to close a transaction within two years.

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Billionaire investor Bill Ackman helped pressure Pornhub into taking down millions of unauthorized videos, report says

bill ackman
Bill Ackman.

  • Bill Ackman helped to pressure Pornhub into purging unauthorized videos.
  • Ackman texted then-Mastercard CEO Ajay Banga about the issue, Institutional Investor reported.
  • Mastercard and Visa swiftly cut ties with Pornhub, and the site deleted 80% of its videos.
  • See more stories on Insider’s business page.

Billionaire investor Bill Ackman helped to pressure Pornhub into removing millions of unauthorized videos from its website, Institutional Investor reported this week.

The Pershing Square Capital Management boss was browsing Twitter last December when he came across “The Children of Pornhub,” a damning indictment of the porn site by The New York Times columnist Nicholas Kristof. The article detailed how Pornhub allowed unverified users to upload videos without authorization from the people featured in them, enabling revenge porn and other exploitation.

Ackman noted in Kristof’s story that Mastercard and Visa processed payments for Pornhub. The hedge fund manager, who has waged activist-shareholder campaigns against several companies, realized he could leverage his influence to push those publicly listed payment groups to make changes.

Unaware that American Express already banned payments on porn sites, he texted Mastercard CEO Ajay Banga a link to the story and the following message: “Amex, VISA and MasterCard should immediately withhold payments or withdraw until this is fixed. PayPal has already done so.”

Banga swiftly replied, “We’re on it,” according to Institutional Investor.

Days later, Mastercard announced it had instructed its partners who connected Pornhub to its payment network to cease accepting the site’s charges. The payments group had found evidence of illegal activity and was continuing its investigation, it said.

Visa promptly cut ties with Pornhub too and launched an investigation. The porn site declared less than 24 hours later that it had removed 10 million videos, or 80% of all the videos on its site.

MindGeek didn’t immediately respond to a request for comment from Insider.

Pornhub-owner MindGeek was already under pressure from human rights activists such as Laila Mickelwait, while litigator Michael Bowe was signaling to the credit-card companies that lawsuits might be on the way, Institutional Investor said.

However, Ackman’s text to Banga and his tweets about the issue may have tipped the balance. “It wasn’t until Bill really laid on the pressure and said, ‘Do the right thing,’ that they did,” Mickelwait told the publication.

The billionaire’s key takeaway from the episode was that investors can influence companies to act more responsibly, especially now that environmental, social, and governance (ESG) standards are gaining momentum. “CEOs get a zillion emails, but the one group that rises to the top of the line … is its biggest shareholders, influential shareholders,” he told Institutional Investor.

“A tweet can move the needle,” he added.

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Billionaire investor Bill Ackman told a story about his song-writing grandfather that won over Universal Music’s bosses

bill ackman
Bill Ackman.

  • Bill Ackman’s SPAC is close to buying 10% of Universal Music Group for $4 billion.
  • Ackman told a story about his grandfather, a songwriter, to win over UMG’s bosses.
  • UMG executives gifted Ackman two records and the sheet music for his grandfather’s hit song.
  • See more stories on Insider’s business page.

Bill Ackman’s special-purpose acquisition company (SPAC) is close to buying 10% of Universal Music Group for $4 billion. The billionaire investor might have his grandfather’s musical talents to thank if he manages to seal the deal.

The Pershing Square chief began his first meeting with UMG executives by regaling them with a story about Herman Ackman, The Wall Street Journal reported, citing people involved in the transaction.

Ackman’s grandfather wrote a song called “Put Your Arms Where They Belong (For They Belong to Me)” in 1926, which he sold to music-publishing group Tin Pan Alley for $150. The ditty sold more than 750,000 copies, Ackman told the bosses of the world’s biggest music company, according to The Journal.

The UMG executives later discovered that their company owned the elder Ackman’s recording. They dug up two records of the song and the accompanying sheet music, mounted and framed them, and gifted them to Ackman, The Journal reported.

Read more: A 29-year-old crypto billionaire shares how investors can use Tesla or Apple stock as collateral to buy bitcoin or ether

Vivendi, UMG’s parent company, met with multiple private-equity firms and other investors interested in buying a piece of the division. Ackman’s clear passion for the music business – rooted in his grandfather’s legacy – along with his relationship with management and his vision for growing the company, helped him stand out from the crowd, The Journal said.

Ackman’s SPAC, Pershing Square Tontine Holdings, is the vehicle looking to acquire the UMG stake. PSTH, which joined the stock market last summer, would remain a public company and could have nearly $3 billion to pursue another deal, even if the UMG transaction is successful.

Pershing Square also hopes to launch a new take on SPACs called a SPARC, which won’t lock up investors’ capital while it searches for a deal, and won’t have the pressure to close a deal within two years. Ackman’s proposed SPARC would be armed with up to $11 billion to pursue a business combination.

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Bill Ackman’s SPAC falls after confirming talks to acquire 10% of Universal Music in long-awaited deal

FILE PHOTO: FILE PHOTO: Bill Ackman, CEO of Pershing Square Capital, speaks at the Wall Street Journal Digital Conference in Laguna Beach, California, U.S., October 17, 2017. REUTERS/Mike Blake/File Photo
  • Bill Ackman’s SPAC fell as much as 11.6% Friday after it confirmed it is in talks to reach a deal with Universal Music.
  • Pershing Square Tontine Holdings’ investment could value the music group at $40 billion.
  • The size of the blank check firm and prominence of Ackman has had investors eagerly awaiting news of the deal since PSTH went public last summer.
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Billionaire Bill Ackman’s special purpose acquisition company Pershing Square Tontine Holdings fell as much as 11.6% Friday after it confirmed it is in talks to reach a deal with Universal Music.

Shares of the blank check company traded around $22.50 shortly after the Friday opening bell.

Friday morning Pershing Square Tontine Holdings confirmed that it is in discussions with Vivendi to acquire 10% of the outstanding ordinary shares of Universal Music Group for approximately $4 billion.

The deal with Universal would be the largest SPAC transaction on record, according to the Wall Street Journal. It would have an enterprise value of about $42 billion.

Ackman’s pending deal with Universal Music was first reported by The Wall Street Journal. PSTH shares fell as much as 8% in Thursday aftermarket trading after the news broke.

The size of the blank check firm and prominence of Ackman has had investors eagerly awaiting news of the deal since Pershing Square Tontine went public last summer.

In a press release, Ackman called Universal Music Group “one of the greatest businesses in the world,” and touted the deal as an “iconic transaction.” He highlighted UMG’s leading market share, stellar management, exposure to music streaming, minimal capital needs, and several other attributes that attracted him to the business.

But not all investors are excited about the acquisition. A measure of social sentiment showed that users on StockTwits were largely bearish on the SPAC Friday morning.

“SPACs are dead 🙂 I’m glad you all got burnt. Stop buying bull s**t,” one user wrote. “Told u all it’s not starlink,” another said.

Ackman’s hedge fund and its affiliates have the right to buy another $1.4 billion of PSTH stock, meaning the vehicle could be armed with almost $3 billion to pursue another business combination.

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US stocks rise after jobs data shows labor market strengthening after disappointing April report

Stock trader
Peter Tuchman, right, works among fellow traders at a post on the floor of the New York Stock Exchange, Wednesday, March 4, 2020.

  • US stocks rose Friday on the latest jobs data that indicate a strengthening labor market, though at a slower pace than analysts were predicting.
  • “The economy is still far from showing substantial progress with the labor market recovery,” an analyst said.
  • The 10-year US Treasury yields slightly fell to 1.604% compared with Thursday’s 1.624%.
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US stocks rose Friday as investors cheered May jobs data that indicated a strengthening labor market after a disappointing April reading.

Non-farm payrolls showed the US economy added 559,000 jobs in May, the Bureau of Labor Statistics said Friday. However, that was slightly lower than the 674,000 median estimate economists surveyed by Bloomberg were predicting.

“The May nonfarm payroll report showed that the economy is still far from showing substantial progress with the labor market recovery,” Ed Moya, senior market analyst at Oanda, said in a note.

He continued: “Labor market hiring remains modest at best and this should support a complete labor market recovery for the Fed at some point between the end of 2022 and early 2023.”

The reading shows a sharp acceleration from April’s dismal report, which saw job growth land well below economist forecasts. The May increase marks a fifth straight month of job additions.

In the bond market, the 10-year US Treasury yields slightly fell to 1.604% compared with Thursday’s 1.624%.

US stocks closed mostly lower Thursday as investors mulled over a new report that President Joe Biden may be open to a lower tax hike for corporations. Mega-cap tech stocks led losses, with Apple, Google, Facebook, and Amazon all down at least 1% Thursday. Tesla fell as much as 5%.

Here’s where US indexes stood at the 9:30 a.m. ET open on Friday:

AMC Entertainment has asked shareholders to let it issue another 25 million shares in the wake of the stock’s 2,300% rally, saying it will fortify the movie-theater chain with the means to chase acquisitions “hard” and turn itself around. The company CEO Adam Aron revealed this in a YouTube interview with Trey’s Trades Thursday night.

Meanwhile, billionaire investor Bill Ackman confirmed that his blank check company, Pershing Square Tontine Holdings, is in talks to spend about $4 billion for a 10% stake in Universal Music Group. He also unveiled plans to launch a new investment vehicle and deploy up to $14 billion on future transactions.

In cryptocurrencies, bitcoin slipped as much as 8% after Elon Musk signaled a potential breakup with the digital asset by posting a broken-heart emoji and a reference to a popular Linkin Park song. Bitcoin has fallen more than 40% since its April record high of near $65,000.

West Texas Intermediate crude was up 0.60%, to $69.22 per barrel. Brent crude, oil’s international benchmark, was also up 0.52%, to $71.68 per barrel,

Gold was down 1.9% to $1873.70 an ounce.

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Billionaire investor Bill Ackman’s SPAC is close to striking a deal with Universal Music, report says

bill ackman
Bill Ackman

  • Bill Ackman’s SPAC is close to striking a deal with Universal Music, The Wall Street Journal said.
  • Pershing Square Tontine Holdings could agree a transaction valuing the music group at $40 billion.
  • Universal Music, a division of Vivendi, racked up $9 billion in revenue last year.
  • See more stories on Insider’s business page.

Billionaire investor Bill Ackman’s special-purpose acquisition company (SPAC) is close to agreeing a transaction with Universal Music Group that would value the music titan at $40 billion, The Wall Street Journal reported on Thursday, citing people familiar with the matter.

Ackman’s Pershing Square Tontine Holdings might finalize the megadeal in a matter of weeks, although it could still fall through, sources told The Journal. PSTH shares fell as much as 8% in aftermarket trading after the news broke.

Universal Music, which represents artists including Taylor Swift and Billie Eilish, is currently owned by Vivendi, a French media conglomerate. The segment grew constant-currency revenue by 5% to 7.4 billion euros ($9 billion) last year, and operating income by 20% to 1.4 billion euros, Vivendi’s latest annual report shows.

Vivendi disclosed in mid-May that it was considering selling 10% of Universal Music to an “American investor” – which may be Ackman – or pursuing a public offering of 5% to 10% of the segment’s shares. Tencent, a Chinese technology conglomerate, doubled its stake in Universal Music to 20% last year, valuing the business at 30 billion euros.

Ackman, the boss of Pershing Square Capital Management, said last month that his team had identified an “iconic, phenomenal, great business” back in November 2020, and he hoped to strike a deal to purchase a piece of it within the next few weeks. He said the target was so attractive and interesting that it was “worth the energy and the effort.”

The hedge fund manager took PSTH public last summer with the goal of spending around $5 billion for a minority stake in a private business. Ackman’s reputation as a top investor – boosted by his lucrative pandemic hedge and his fund’s 70% gain last year – and the size of his SPAC prompted intense speculation about his possible target.

Pershing Square Capital Management declined a request for comment from Insider.

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Investors are worried Bill Ackman’s SPAC is struggling to find an acquisition target

FILE PHOTO: Bill Ackman, chief executive officer and portfolio manager at Pershing Square Capital Management, speaks during the SALT conference in Las Vegas, Nevada, U.S. May 18, 2017.  REUTERS/Richard Brian
Bill Ackman, chief executive officer and portfolio manager at Pershing Square Capital Management, speaks during the SALT conference in Las Vegas

  • Investors are getting anxious about billionaire hedge fund manager Bill Ackman finding a target for his SPAC to take public, Institutional Investor reported.
  • Ackman says a deal has been in the works since November, and that the SPAC team has done its homework.
  • Even so, if he can’t get the transaction done, Ackman said his SPAC will move on to another target.
  • See more stories on Insider’s business page.

Investors are starting to worry Bill Ackman’s blank-check company is struggling to find an acquisition target, Institutional Investor reported this week.

The billionaire hedge fund manager told investors on a Wednesday call that he will make an announcement whether his Pershing Square Tontine Holdings SPAC gets a deal done with the current target or has to move on.

The uncertaintly is making retail investors anxious. The story from Institutional Investor found sentiment was low on a “PTSH support group” page comprised of retail traders. One told the magazine that it “seems like the deal won’t happen” as Ackman keeps mentioning the idea of a backup target.

His SPAC – which launched with the goal of spending $5 billion to take a private business public – started working on a transaction in early November.

“We’ve done our homework, we like the business, we love the management team, and we are working to complete a transaction, as I said within weeks,” he said on the call, according to a transcript from Seeking Alpha.

“If we cannot get this transaction done, we will move on to target number two, and there are other interesting opportunities for us to pursue,” he added.

Following Ackman’s comments, shares of Tontine, which went public in July 2020 under the ticker PTSH, declined, closing out the day 1.2% lower.

According to a Monday filing with the Securities and Exchange commission, Tontine said it’s “currently in negotiations with a specific business target and while substantial progress has been made, significant issues remain to be addressed before a transaction can be announced and consummated, if at all.”

Several institutional investors have sold all or some of their positions in the SPAC, though its early backers are still in place. Hedge Fund Soroban Capital sold its stake of 5 million shares, Taconic Capital sold half of its 1.1 million shares, and the Ontario Teachers Pension Plan sold 4.3 million shares, though that was only part of its investment, Institutional Investor reported.

But early backers Guggenheim Capital and Baupost Group still hold tens of millions of shares in Ackman’s SPAC.

On The Wall Street Journal’s “The Future of Everything Festival,” Ackman said he and his team found an “iconic, phenomenal, great business with a great management team that meets all of our criteria.” But, the nature of the target, the complexity of the deal, and other issues have caused delays, he said, adding that the company is so attractive it will be “worth the energy and the effort.”

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