PSTH Stock: What Is the Big Catalyst for Pershing Square on June 23?

SPAC investors watching what’s next from Pershing Square Tontine Holdings (NYSE:PSTH) seem to be giving the firm’s latest update a big “meh” from the look of this morning’s activity, or lack thereof. PSTH stock was little changed as of 10:00 a.m. Eastern.

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Readers may recall that PSTH stock shed 7% in the June 4 pre-market before closing down almost 12% for the day after the company announced it would take a stake in Universal Music Group (UMG).

Yesterday, the Bill Ackman-led special purpose acquisition company published an update on its deal with France’s Vivendi (OTCMKTS:VIVEF) to acquire 10% of its music business for approximately $4 billion.

A review of that update shows not much has changed about the deal since the announcement earlier this month. However, it is worth noting that:

  • Pershing Square, as the sponsor of the SPAC, will waive its right to receive sponsor warrants in the transaction, opting, instead to receive warrants only in the merger entity (RemainCo).
  • Dilution from the treatment of director warrants has effectively been eliminated, with the strike price changed from $24 per share to 20% about the net asset value of the merger entity.
  • The SPAC, in early July, will give PSTH stock holders the opportunity to tender their shares for $20 a piece. Even after tendering their shares, holders will continue to own the 1/9th distributable redeemable warrant per PSTH share, unless it was previously sold.
  • The SPAC will remain a publicly traded company with $1.5 billion of cash after the distribution of UMG shares and will continue to seek a new business combination partner.

An investor day with a further update is scheduled for tomorrow, June 23.

Meanwhile Vivendi shareholders approved on Tuesday the company’s plan to spin off UMG, with 99.9% of the votes in favor, Vivendi said in a press release. According to The Wall Street Journal, UMG, home to stars including Taylor Swift, Billie Eilish and Queen, operates the world’s second-largest music publishing company. It has a 40% market share of the U.S. market and 30% globally.

Patience Wearing Thin for PSTH Stock Investors

Investors have been waiting somewhat patiently for Ackman’s SPAC to make a full-fledged merger move. The fund manager said in late March, “Eight months since PSTH’s launch, we remain convinced that an investment in PSTH will generate highly attractive long-term returns, even from PSTH’s current stock price,” Reuters reported.

Last month, he told a Wall Street Journal interviewer, “We’re either going to get a transaction done in the next relative short term — weeks — or we’ll be onto the next one.” In May, Ackman’s Pershing Square investment management firm “bought a roughly 6% stake” in Domino’s Pizza (NYSE:DPZ)

Once a deal closes with Pershing Square Tontine, Ackman has also mentioned there would be a Pershing Square Tontine II investment opportunity.

On the date of publication, Robert Lakin 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.

InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News and as a buyside equity research editor. His Substack newsletter, TLV Strategist, covers the Israel business scene.


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