Bill Ackman rejigs Universal deal after SPAC plan criticised By Reuters

PARIS (Reuters) -Billionaire investor Bill Ackman will buy up to 10% of Vivendi (PA:VIV)’s Universal Music Group through his main hedge fund, rather than a special purpose acquisition company (SPAC), after investors and regulators questioned his use of a SPAC.

The investment had come just ahead of a plan by Vivendi to list and spin-off 60% of Universal to its shareholders, cashing in on booming streaming revenues at the unit behind singers such as Taylor Swift.

Pershing Square (NYSE:SQ), the main hedge fund run by Ackman, will now replace Pershing Square Tontine Holdings (PSTH) as the investor, the group said.

PSTH added in a statement its decision was prompted by issues raised by the U.S. Securities and Exchange Commission (SEC) about whether the deal met New York stock exchange rules. It did not specify what precise problems the SEC had focused on.

But the PSTH deal had raised eyebrows from the outset, as SPACs – or listed shell companies that raise funds to buy up private firms, as an alternative to traditional stock market listings – have until now largely identified entire companies to acquire.

“We underestimated the reaction that some of our shareholders would have to the transaction’s complexity and structure,” Ackman said in the PSTH release, adding that shares in his SPAC vehicle had fallen 18% since the Universal deal was announced in June.

Ackman added the SPAC would try to find a new merger partner. SPACs have to return funds to investors if they do not find a target within a certain time frame.

Vivendi said in a separate statement that Ackman’s investment via Pershing Square would likely amount to between 5% and 10% of Universal’s capital, adding it would open it up to other investors to make up the shortfall were it less than 10%.