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

• 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.

The Financial Times reported on Thursday that Ackman intends to acquire a 10% stake in Universal Music, and beat out a rival suitor, private-equity group Hellman & Friedman, by raising his offer this week. The newspaper, citing a source briefed on the situation, added that Vivendi sees the SPAC listing as a way to value Universal Music before it floats the business on the Euronext exchange later this year.

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.