Bill Ackman made waves on Friday when he confirmed his Pershing Square Tontine Holdings (NYSE:PSTH) was in talks to acquire a stake in Universal Music Group. The immediate reaction was negative, sending PSTH stock down in pre-market trading. But what is Universal Music Group? And why is this deal falling short of market expectations?
To start, many retail investors look to Ackman as a key player in the SPAC market. His Pershing Square Tontine Holdings was set to be one of the largest deals yet, and he has said the blank-check company was targeting mature unicorns.
Because the market loves speculation, a whole list of potential merger targets has been floating around. Rumors have included SpaceX, Bloomberg and Stripe.
Today, Ackman surprised many investors when he confirmed PSTH was in talks to acquire a 10% stake in Universal Music Group. He will spend about $4 billion to make this deal, and UMG will have a valuation north of $40 billion.
With all this in mind, what do you need to know about PSTH stock and Universal Music Group?
PSTH Stock Sets Sights on Universal Music Group
- Universal Music Group touts itself as the leading music company in the world.
- This is because it is one of the Big Three record labels, alongside Sony Music and Warner Music (NASDAQ:WMG).
- The company operates a variety of businesses including music recording, music publishing, merchandising and audiovisual content.
- It also has a wide reach, operating in more than 60 countries.
- Investors may be more familiar with its labels and brands. This list includes Capitol Music Group, Abbey Road Studios, EMI and Virgin Music.
- Universal Music Group is also the record label behind artists like Lady Gaga, Taylor Swift, Billie Eilish and the Weeknd.
- Its corporate headquarters is in Hilversum, Netherlands, and its operational headquarters is in Santa Monica, California.
- Currently, the French media company Vivendi (OTCMKTS:VIVEF) is the majority owner.
- Tencent (OTCMKTS:TCHEY) is a minority owner, having acquired a stake in 2020.
- Importantly, Universal Music Group will not be merging with PSTH stock.
- Instead, if the deal goes through, Pershing Square will distribute its stake to shareholders in UMG common stock.
- This is because the music company is currently prepping to come public on the Euronext Amsterdam exchange in Q3.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Sarah Smith is the Editor of Today’s Market with InvestorPlace.com.