Renowned special purpose acquisition company (SPAC) of the U.S., Pershing Square Tontine Holdings (PSTH), has officially announced plans to acquire a 10% stake in Universal Music Group (UMG).
The company has confirmed that it has signed a definitive agreement with Vivendi which has major ownership in UMG to buy 10% outstanding shares in the music firm for nearly $4 billion.
According to a previous announcement made by Vivendi, UMG’s listing in Amsterdam will be completed as early as September 27.
Sources have confirmed that following the Amsterdam listing and distribution of shares to PSTH, the music company will be owned 10% by Vivendi, 10% by PSTH and 20% by Tencent Holdings led consortium and 60% will be traded on the Amsterdam Euronext.
Reiterating to its investors, PSTH stated that UMG had competitive advantages and strategic attributes such as predictable and recurring streams of revenue that require lesser capital despite higher growth. UMG also offers substantial fixed-cost expense enabling long-term margin expansion, PSTH added.
PSTH also informed its shareholders that during the negotiations with Vivendi, it turned out that several legal, tax and other considerations prevented Vivendi from signing the conventional de-SPAC merger deal. They also precluded Vivendi from selling above 10% UMG share.
Despite the constraints created by additional complexity, legal, time and other costs, the company was confident that the opportunity to buy such an extraordinary business was a favorable option for its shareholders, PSTH cited.
According to the company, the UMG transaction offers same benefits and protections to its shareholders that are provided in a traditional de-SPAC merger and share distribution.
Reportedly, following the UMG distribution, shareholders of PSTH will continue to own shares in the company, which will exist with around $1.5 billion cash along with additional cash of $1.4 billion through forward purchase agreements.