Pershing Square (NYSE:PSTH), Bill Ackman’s hedge fund management company, is seeing its stock dip lower this morning after the company pulled out of a deal with Universal Music Group.
Pershing Square was working with Vivendi (OTCMKTS:VIVHY), the owner of Universal Music Group, that would take the music company public and provide shareholders of PSTH stock with shares of the company’s public stock. However, that deal is no longer moving forward.
In light of this, Pershing Square founder and CEO Bill Ackman, said the following in a letter to investors.
“Our decision to seek an alternative initial business combination (“IBC”) was driven by issues raised by the SEC with several elements of the proposed transaction – in particular, whether the structure of our IBC qualified under the NYSE rules.
We and our counsel had multiple discussions with the SEC attempting to change its position on the issues that it had identified. Ultimately, our board concluded that it was in the best interest of shareholders to assign the UMG stock purchase agreement to Pershing Square (which is specifically permitted under the terms of the agreement with Vivendi) as it did not believe PSTH would be able to consummate the transaction in light of the SEC’s position.”
Pershing Square notes that this doesn’t mean it won’t move forward with another merger deal. The company is seeking out a new merger partner and has 18 months to do so. It intends for the next possible deal to be set up as a conventional SPAC merger.
PSTH stock was down 1.7% as of Monday morning.
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On the date of publication, William White 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.