Ackman's Pershing Square in talks to buy 10% of Vivendi's Universal
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[June 04, 2021] By
Svea Herbst-Bayliss and Mathieu Rosemain
(Reuters) -Billionaire William Ackman's
Pershing Square Tontine Holdings is in talks to buy 10% of Universal
Music Group in a deal that would value the label at $40 billion and make
it the largest ever investment by a blank check vehicle.
Pershing would invest $4 billion to buy the Universal stake, making it
the largest target for a special purpose acquisition company (SPAC),
trumping Southeast Asian ride-hailing and food delivery firm Grab
Holdings's SPAC deal.
Vivendi, controlled by French billionaire Vincent Bollore, has benefited
from growing streaming revenues at the world's biggest music label,
which is behind artists such as Taylor Swift and Lady Gaga.
It has already sold chunks of Universal Music to a consortium led by
Chinese giant Tencent, and plans to list Universal in Amsterdam by
September as part of a two step transaction to distribute 60% of the
label to existing investors.
Vivendi said the deal with Ackman's SPAC would give Universal an
enterprise value of 35 billion euros ($42.4 billion).

With about 2 billion euros of debt for Universal, the implied equity
value for the music label is roughly 33 billion euros, along the lines
of the valuation given by Vivendi last month, Bernstein said in a note.
"Universal Music Group is one of the greatest businesses in the world,"
said Ackman.
Vivendi shares were down around 0.8% by 1046 GMT, after rising in early
trading.
A frenzy of SPAC listings in the United States has seen over $300
billion raised through the listing of blank check vehicles in 2020 and
2021, according to Refinitiv data, but Ackman's unit has been one of the
most closely watched.
Pershing Square raised $4 billion in July 2020 in what was then the
biggest listing by a blank-check firm.
Pershing's shares were down nearly 6% at $23.5 a share in after-market
trade, close to its initial public offering (IPO) price of $20, after
news of the potential deal broke, with some observers expressing concern
over the complexity of the potential shareholder structure.
The closer that SPAC shares trade to their IPO price, the more skeptical
investors are that a deal will be completed. The SPAC listing frenzy has
cooled in recent months, with new issuance dropping dramatically and
existing blank check vehicles trading down as a higher-rate environment
hurt appetite for riskier investments. The IPOX SPAC index is down 23%
from its February peak.
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William 'Bill' Ackman,
CEO and Portfolio Manager of Pershing Square Capital Management,
speaks during the Sohn Investment Conference in New York City, U.S.,
May 8, 2017. REUTERS/Brendan McDermid

SPACs usually aim to buy up private companies and take them public as an
alternative to listing shares through an IPO. In the case of Universal, the
SPAC's investment will not result in a merger.
"Universal Music is a business that can be valued without speculating about it
having a future," Erik Gordon, a professor of business at the University of
Michigan, said of Pershing's investment.
IPO GOING AHEAD
A Vivendi spokesman confirmed on Friday there were no changes to the plans for a
Universal IPO by Sept. 27 after the deal with Ackman. The company, which owns
80% of Universal, had already flagged it could sell an additional 10% of the
group to an American investor prior to the IPO.
Bringing in Ackman will diminish the stakes held by Vivendi, at the end of the
distribution-in-kind, giving Vivendi 10%, Pershing 10%, Bollore 16% and the
Tencent-led consortium 20%.
Vivendi shareholders are due to vote on the transaction at a June 22 investor
meeting.
The Universal IPO plans deal has raised hackles from activist fund Bluebell,
however, which said it penalised minority shareholders as the
distribution-in-kind structure was not tax efficient.
Bluebell, which has declined to reveal the size of its stake in Vivendi, has
called on France's markets watchdog to examine disclosures around the deal.
($1 = 0.8258 euros)
(Reporting by Svea Herbst-Bayliss, Anirban Sen and Mathieu Rosemain; Additional
reporting by Eva Mathews in Bengaluru, Gwenaelle Barzic and Sarah White in
Paris, Abhinav Ramnarayan in London; Editing by Shinjini Ganguli, Sonya
Hepinstall and Jane Merriman)
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