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Bill Ackman Closing $4 Billion SPAC, Returning Investments

Hedge fund manager Bill Ackman

Hedge fund manager Bill Ackman / Facebook

Billionaire activist investor Bill Ackman announced plans to close down his $4 billion Pershing Square Tontine Holdings (PSTH) SPAC company and return the funds to investors. PTSH failed to live up to expectations and was even sued at one point by investors.

Pershing Square explained the closing by saying that the firm was “unable to consummate a transaction that both meets our investment criteria and is executable.” It cited the “adverse market for SPAC merger transactions” as the main reason for this.

The lawsuit came in August 2021. The suit claimed that PTSH grossly overpaid its directors.

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An SPAC is a publicly-traded pool of cash with no business activity other than looking for a private firm to merge with and subsequently take public. More and more companies are choosing this route for their IPOS. The idea here is that a company goes public by merging with an already existing entity, thereby saving on many of the costs involved with an IPO, as well as some of the risks.

In a letter to investors, Bill Ackman explained, “High quality and profitable durable growth companies can generally postpone their timing to go public until market conditions are more favorable, which limited the universe of high-quality possible deals for PSTH, particularly during the last 12 months.”

“We launched PSTH in the depths of the pandemic,” he wrote, “because we believed that the capital markets would likely be impaired from the economic uncertainty created by the pandemic.”

“The rapid recovery of the capital markets and our economy were good for America but unfortunate for PSTH, as it made the conventional IPO market a strong competitor and a preferred alternative for high-quality businesses seeking to go public,” added Bill Ackman.

PSTH was supposed to 10% of Universal Music Group UMG. But in mid-July its board of directors unanimously determined not to proceed with the Universal Music Group transaction, and to assign their share purchase agreement to Pershing Square Holdings, Ltd. (LN:PSH) (LN:PSHD) (NA:PSH) and affiliates (“PSH and affiliates” or “Pershing Square”). Pershing Square has also agreed to assume the Vivendi indemnity agreement and their UMG transaction costs.



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