Enrique Abeyta’s Take on PSTH Dropping UMG Deal

Published on

Whitney Tilson’s email to investors discussing Enrique Abeyta’s take on Pershing Square Tontine Holdings Ltd (NYSE:PSTH).

Get The Full Henry Singleton Series in PDF

Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q2 2021 hedge fund letters, conferences and more

PSTH's Deal With UMG Is A No Go

Here's an excerpt from the update my colleague Enrique Abeyta sent to his Empire SPAC Investor subscribers yesterday on Bill Ackman's Pershing Square Tontine Holdings (PSTH):

Today's announcement that Pershing Square Tontine Holdings can no longer consummate its transaction with Universal Music Group ("UMG") has to be a disappointment for Bill Ackman – but less so for shareholders.

Ackman had come up with a "super clever" structure that could meet the needs of Vivendi (VIV.PA), the seller of UMG. (You can refer back to our special report on the deal right here.)

Unfortunately, the U.S. Securities and Exchange Commission ("SEC") decided the transaction was too complicated for it. So, it blocked the deal.

Ackman will still be investing in UMG. But he will be using his Pershing Square funds rather than the PSTH vehicle.

So, what does this mean for shareholders? It might actually be a good thing! We absolutely love the music business and think the transaction would have worked out great in the end. But in the near term, the stock market was taking a different view, and the stock had been under pressure. With special purpose acquisition companies ("SPACs"), in general, having been sold off savagely, it's hard to know how much of this was specific to the transaction...

Remember that Ackman always wanted to do more deals after the current one. Being active in negotiations, he's not starting from scratch and still has an enormous war chest. And even though the SEC stopped his plans, he bent over backwards to accommodate UMG, and he still came through with the deal. This is huge for prospective sellers because it shows Ackman is a man of his word...

Ackman looks even better as a prospective partner, still sitting on a massive pile of cash.

Empire SPAC Investor subscribers can read the full update here. If you aren't a subscriber, you can find out how to gain instant access to the update – and the rest of Enrique's research on PSTH – as well as the details on how to get 40% off the first year of a subscription to Empire SPAC Investor by clicking here.