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Bill Ackman’s SPAC Abandons Universal Music Agreement

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Pershing Square Tontine Holdings, Bill Ackman’s massive SPAC, did so in a highly complex transaction when it reached an agreement to buy a 10 percent stake in Universal Music Group last month. got a lot of explanation. Now, feedback from the SEC forced Ackman to change course.

Here’s a quick reminder of how the original deal should work:

  • Pershing Square SPAC would invest $4 billion to buy a 10 percent stake in Universal Music, which is home to artists like Taylor Swift and Ariana Grande and has been offered to the public by its parent company, Vivendi.

  • The remaining $1.5 billion in SPAC would be transferred to a new publicly traded buyout fund that wanted to make another deal.

  • Existing SPAC investors would acquire a financial instrument that gave them the right to buy. yet another deal broker that seeks its own takeover target.

The SEC had concerns about whether there was a SPAC agreement. In letter to investors Today, Ackman said his team couldn’t change the agency’s mind in more than one meeting. It didn’t help that investors in SPAC seemed cautious either: Shares in Pershing Square Tontine have lost almost a fifth of their value since the deal was announced. “We underestimated the reaction Ackman said some of our shareholders will remain committed to the complexity and nature of the transaction.

Now back to the drawing board. Ackman’s hedge fund will directly buy Universal Music’s stake. Ackman added that, unless shareholders give more time, Pershing Square Tontine has 18 months to find and close a new deal and that “our next business combination will be structured as a traditional SPAC merger.”

  • Will investors contemplating the Universal Music deal show relief or skepticism about SPAC’s next move? Shares of Pershing Square Tontine have bounced back to roughly their IPO price, so it will tell you how they traded after the company’s pivot.

This is the latest sign of regulators reining in the SPAC market, express their concern protect investors in these funds that exploded last year. Federal prosecutors and the SEC Researching Lordstown MotorsElectric truck manufacturer that went public through SPAC, providing confusing information about its orders. SEC accuses space travel company Momentus and SPAC partner with misleading investors.

  • For all its complexity, Ackman’s SPAC was determined as: particularly friendly to investorswithout typical compensation for sponsors who have received criticism and regulatory review. His deal with Universal Music didn’t come with the overly rosy financial projections that have marked many SPAC deals, either. Going after Ackman’s multi-layered process, regulators seem to be signaling that they want SPACs to stick with the plain vanilla approach.

The UK’s first day without pandemic restrictions got off to a rough start. Today, hailed as “Liberty Day” by tabloids, removing most virus-related limits It has been marked by increased cases and staff shortages as people self-isolate after being pinged by a government tracker and tracer app. (Prime Minister Boris Johnson is among those in a 10-day quarantine.)

OPEC and Russia have reached an agreement to increase oil production. Countries will pump more oil next month, it will increase worldwide supplies by 2 percent. But analysts said supply will remain tight, at least until the drop.

Robinhood targets a $35 billion valuation in its IPO An online trading application expected price range launches a roadshow to potential investors for its market debut. This allows the company to start trading next week.

An Israeli spyware producer is linked to hacking of activists, reporters and executives. Research 50,000 phone numbers revealed Associated with people of interest to NSO Group customers, and dozens of smartphones from the list. NSO, which criticized For its ties to authoritarian governments, it has denied wrongdoing.

Zoom is making a $15 billion bet on phone calls. video conferencing company Five9 will buy, a call center operator in its largest acquisition to date. Zoom is looking beyond its core market while its competitors are squeezing in their own turf.

In other news from the SPAC world, luxury menswear brand Ermenegildo Zegna plans to end more than a century of family control this morning. Going public through SPAC. Like other high fashion companies, it swells as well-heeled customers bet that they will continue to spend.

The company wanted the capital to expand. Combined with a blank check fund run by European investment firm Investindustrial, Zegna will be listed on the New York Stock Exchange, generating $880 million in fresh cash and access to capital markets to raise more. The grandson of the company’s founder and CEO, Gildo Zegna, M.&A. on the company’s future: “We want to merge,” he said in a phone call with reporters this morning.

  • Background: The Zegna family was approached in January by Sergio Ermotti, chairman of SPAC, former UBS CEO. Prior to that time, Gildo Zegna said the company was happy to remain anonymous: “There was no competition between a SPAC and an IPO.”

Other luxury homes are also making deals. While LVMH acquired Tiffany & Company earlier this year, it is reportedly in talks with L Catterton, a mutual fund backed by LVMH. buy Etro sticker. And both Capri Holdings (formerly Michael Kors) and Tapestry (once Coach) have made acquisitions in recent years.

– Dara Khosrowshahi, CEO of Uber, in an interview With Times Opinion columnist Maureen Dowd.

▶︎ Another billionaire is going to space. Jeff Bezos on Tuesday is expected to become the second billionaire rocket company founder to go into space this month. (Richard Branson nine days beat it.) Billionaires’ trips are one small step towards a new frontier for tourism – and liability insurance.

▶︎ Earnings reports from United, Southwest and American Airlines It will serve as a progress report for post-pandemic travel. Delta Air Lines last week announced his first wife Since the start of the pandemic, domestic leisure travel has fully recovered, he said. But there is still a big question about whether business travel will be the same as before.

▶︎ No Spectators Olympics starts on Friday. Over the weekend, the organizers reported: the first cases in the village of athletes. Toyota, a major sponsor, today Cancel TV commercials about the Olympics Public opinion in Japan is against it. hosting the Olympics rarely pays it is shaping up to be particularly costly for cities at the best of times, but especially for Tokyo.

President Biden on Friday told reporters that social media platforms are “killing people” by allowing vaccine disinformation to spread. highly contagious Delta variant It has caused an increase in the number of cases, especially in places where vaccination rates are low. frustration with facebook grew up After recent conversations between White House officials and company executives.

Facebook says Biden was a scapegoat for missed vaccine targets. Facebook vice president Guy Rosen wrote a letter. long blog post During the weekend titled “Passing the Finger Pointing.” Among other things, 85 percent of users in the US said they “have or want to” get the vaccine. some have been questioned company numbers.

Complex. As Kara Swisher pointed out Times Opinion columnFacebook is a gateway to information that is both helpful and hurtful, and “in addition to providing clearly solid information about Covid, it also offers the same region a place where a massive flood of lies has swept through.” Posts and videos seen by Facebook users changing ideas or reinforce priorities? We don’t know anything from the data released so far, and the balance of celebration and contempt depends on it.

Masa Son, chairman of SoftBank, once told WeWork founder and then-president Adam Neumann, over Yoda, “Chicken First!!” He sent a picture of Yoda he wrote. This strange incentive is just one of the eye-catching details in a story. excerpt from the new book“The Cult of Us: WeWork, Adam Neumann, and the Great Startup Mistake.”

Some of the other interesting anecdotes in the book – Here is The Times review — Written by The Wall Street Journal reporters Eliot Brown and Maureen Farrell:

  • Neumann said it needed $70 billion in funding, several times more than any start-up previously, to achieve its growth goals.

  • Neumann told his assistants that he wanted WeWork to buy ride-sharing company Lyft and was in talks to buy restaurant chain Sweetgreen.

  • Neumann wanted him to say in his contract with the company that he could retain control of the company even if he was sent to prison for committing a crime.

The Son’s cryptic message referred to the perennial chicken and egg question. Unmet demand is often what sparks a new business idea. But Son advised Neumann that if he could first show customers what a fully grown chicken would look like, demand would follow. At the time, Neuman was expanding the company into areas such as yacht charter (WeSail) and kindergartens (WeGrow).

The result was a zoo. The son gave up on an important financing deal. Neumann took the boat. Then the pandemic hit and WeWork’s value plummeted. One lesson is that breaking business rules isn’t always a recipe for success.

Opportunities

  • Johnson & Johnson is said to be weighing whether to use bankruptcy laws to protect itself from lawsuits related to talc products. (Reuters)

  • China is reportedly planning to exempt companies that go public in Hong Kong from the cybersecurity scrutiny that triggered Didi Chuxing. (Bloomberg)

  • Is this medical litigation company that went public through SPAC really worth $33 billion? (FT)

Policy

  • The White House is expected to formally accuse the Chinese government of hacking the Microsoft email systems used by thousands of institutions. (NYT)

  • Treasury Secretary Janet Yellen will meet with other regulators today to discuss the benefits and risks of stablecoins. (WSJ)

  • “What China Expects from Businesses: Complete Surrender” (NYT)

  • The failure of a Chinese semiconductor company shows the limits of Beijing’s support for potential national tech champions. (NYT)

best of the rest

  • “What Happened to IBM’s Watson?” (NYT)

  • Two Americans convicted of helping to smuggle Carlos Ghosn out of Japan were sentenced to more than a year in prison. (NYT)

  • Britain’s biggest divorce settlement has ended in a $186 million settlement. (Bloomberg)

  • Curtis Sittenfeld’s latest short story: The fictional story of a babysitter working for a family very similar to a real-life billionaire clan. (Atlantic Ocean)

We want your feedback! Please email your thoughts and suggestions. dealbook@nytimes.com.



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