Universal Music’s share sale is frustrated, or find a new buyer

The sale of 70% of Universal Music Group’s shares seems to be a foregone conclusion.

Before yesterday (July 19), the sale of 70% of Universal Music Group by Vivendi seemed to be a foregone conclusion.

Universal Music’s share sale is frustrated, or find a new buyer

△ Investor Bill Ackman (Source: Bloomberg)

The French company plans to split a 60% stake in Universal Music and go public on the Amsterdam Stock Exchange in September. And sold another 10% of the shares to the well-known investor Bill Ackman, Pershing Square Tontine Holdings (PSTH), a US-based SPAC company for 3.5 billion euros (approximately US$4 billion).

With the help of loose monetary policy, the European and American markets have seen a boom in “blank check companies (referring to SPACs),” which are aimed at acquiring entire private companies and listing them without having to deal with complicated listing rules.

Previously, Ackman stated that, unlike the large number of SPAC acquisitions that occurred this year, this transaction is unique. The purpose is not to merge with Universal Music, but to acquire shares in companies that have announced plans to go public.

And yesterday, PSTH announced the withdrawal of the 10% share purchase of Universal Music, because the US Securities and Exchange Commission believes that the structure of the transaction does not comply with the New York Stock Exchange’s regulations on SPAC.

Universal Music’s share sale is frustrated, or find a new buyer

△ PSTH’s recent stock price trend (Source: MarketWatch)

Bill Ackman explained the possible reduction in acquisitions: “Since the announcement of the transaction on June 4th, our share price has fallen by 18%. We believe that our shareholders recognize Universal Music, including its attractive growth characteristics, business Quality and excellent management team, but we underestimated the reaction of some shareholders to the transaction structure and transaction complexity.”

In other words, this transaction has been opposed by regulators and investors.

However, the transaction will still be conducted in another form. Pershing Square Holdings Ltd., a hedge fund company, will continue to assume the equity purchase agreement and will eventually acquire 5% to 10% of Universal Music’s shares and pay compensation for exiting the transaction. cost. This company is an independent company formed from PSTH.

Regarding the statement of this transfer, Vivendi responded: “If the final acquired equity is less than 10%, Vivendi still plans to find new investors to make up for this gap, and will share its share with Universal Music on September 21. Complete the transaction before the delisting.”

If all goes well for Vivendi’s sale of 70% of Universal Music’s shares, it means that the company has sold a total of 90% of Universal Music’s shares in 18 months.

In the first quarter of 2020, Vivendi sold a 10% stake in Universal Music to a consortium led by Tencent at a valuation of 30 billion euros, and sold another 10% to Tencent in the first quarter of this year. Each transaction cost Tencent 3 billion euros (approximately 3.5 billion U.S. dollars).

For PSTH, new transactions need to be found in the near future. Because if the SPAC does not find a target within a certain time frame, it must return the funds to the investor.

refer to

《Bill Ackman abandons SPAC plan to take $4bn stake in Universal Music》



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