Last week, Pershing Tontine (PSTH) announced late stage discussions to buy 10% of Universal Music (UMG) (just a few days after I called UMG my #3 target for PSTH). On the heels of the announcement, I wrote a piece “
Is there large potential dilution here in an upside? With up to $3bn of forward purchase agreements at $20/share (with 1/3rd warrants attached), 44M outstanding redeemable warrants at $23/share, and $65M of sponsor warrants at $24/share... would that not create enormous dilution in the upside? I am still trying to wrap my head around the impact of each of these securities.
Thank you for all this PSTH analysis! Can you explain what you meant by this: "I’ll be interested if they address some of the risks from Taylor Swift re-recording Fearless."
Since Taylor's version of Fearless is released on Republic Records (owned by UMG) I'm not sure what the risk is. It's already making (sales and charts) history - where is the risk?
Is there any chance that Ackman adds some kind of put protection for Remainco? One of the big talking points is that investors are lending BA a large sum of money without the standard protections of a SPAC (2 year deadline, NAV redemption).
Also, have you gone through the multiple different ways to purchase UMG? (PSTH, Vivendi stock, holding companies that own Vivendi etc..) What is most tax efficient for investors? What is the most 'pure play' mechanism of buying UMG ahead of the IPO?
How do you reconcile that Remainco should trade at a "Ackman premium§ while PSH, his main vehicle trading in the Netherlands/UK, trades at a "Ackman discount" of almost 30%?
Assuming SPARC trades like PSTH in terms of premium to NAV/call price is a stretch. PSTH had a defined life span and a put option. You do not get both of that with a the SPARC.
Is there large potential dilution here in an upside? With up to $3bn of forward purchase agreements at $20/share (with 1/3rd warrants attached), 44M outstanding redeemable warrants at $23/share, and $65M of sponsor warrants at $24/share... would that not create enormous dilution in the upside? I am still trying to wrap my head around the impact of each of these securities.
Do we have enough details to quantify the exposure PSH will have to the different pieces of PSTH?
PS: I wrote a post last year on the ethical aspects of PSTH, for example how Ackman supported small minority-owned investment banks when launching it. More here: https://greenstarsproject.org/2020/07/22/pershing-square-tontine-holdings-ethical-investing/
Cheers!
Thank you for all this PSTH analysis! Can you explain what you meant by this: "I’ll be interested if they address some of the risks from Taylor Swift re-recording Fearless."
Since Taylor's version of Fearless is released on Republic Records (owned by UMG) I'm not sure what the risk is. It's already making (sales and charts) history - where is the risk?
Thanks!
Jim
Andrew - I think you may be missing the dilution from the FPA warrants in your SOTP tables.
I thought I saw Ackman tweet over the weekend that investors in PSTH would get a SPAR on all future SPARC's - ie not just the current one proposed.
Is there any chance that Ackman adds some kind of put protection for Remainco? One of the big talking points is that investors are lending BA a large sum of money without the standard protections of a SPAC (2 year deadline, NAV redemption).
Also, have you gone through the multiple different ways to purchase UMG? (PSTH, Vivendi stock, holding companies that own Vivendi etc..) What is most tax efficient for investors? What is the most 'pure play' mechanism of buying UMG ahead of the IPO?
How do you reconcile that Remainco should trade at a "Ackman premium§ while PSH, his main vehicle trading in the Netherlands/UK, trades at a "Ackman discount" of almost 30%?
Assuming SPARC trades like PSTH in terms of premium to NAV/call price is a stretch. PSTH had a defined life span and a put option. You do not get both of that with a the SPARC.
Nice note. Think you have a typo in timeline near the start though - UMG spin is Sep-21 not Sep-22