- 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.