Source: Morning Wrap
The world’s largest SPAC is getting a deal now: it will buy 10% of Universal Music Group - the one behind Taylor Swift… perhaps the most complicated ever.
I am curious 🤔 How complex is it?
+ Better to recall the definition of SPAC first: It’s a shell company created to bring others public by going public first and then acquiring them. SPAC is the abbreviation of “special purpose acquisition company”.
Take a deep breath… here we go. 🤯
- Billionaire Bill Ackman’s shell company PSTH will buy 10% of Universal, but will not bring Universal public in the US. Universal will go public in Amsterdam instead.
- After the acquisition, PSTH will no longer be treated as a SPAC on the stock exchange as it no longer fulfills the definition but will remain listed.
- The SPAC will roll into a SPARC (R for rights)... and it’s able to do another acquisition later on.
Wait, is this truly a SPAC deal?
It’s one of a kind… as it runs differently from all existing SPAC deals. SPAC investors are also treated differently here: they will know the acquisition target beforehand. If they don’t like Universal - free to go.
Investors appear cautious on the deal. Shares in Ackman’s SPAC plunged 14% in after-hours trading after the news release, before reversing some of its losses. Probably because it’s so unique for those SPAC investors…?🤔
Or perhaps we should call this a SPARC deal instead?