Bill Ackerman update
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Bill Ackman (Bill Ackman) proposed that if he gets regulatory approval to launch a new car, he would return the $4 billion he raised from investors in his special-purpose acquisition company, citing a lawsuit filed earlier this week. It weakened his ability to reach an agreement.
In a report to Pershing Square Tottine Holdings shareholders late on Thursday, the billionaire investor stated that a lawsuit accusing Spac as an “illegal investment company” compromised its chances of completing the transaction within the specified time. .
Ackerman wrote in the letter: “Although we have been working hard to identify and complete the transaction, and we have begun discussions with potential merger candidates, our ability to complete the transaction within the specified time has been affected by the lawsuit. He called the lawsuit “baseless,” but said that “mere existence” might deter potential targets.
The civil lawsuit was filed by former securities exchange commissioner Robert Jackson and Yale University Law School professor John Molly on behalf of PSTH shareholders, accusing Ackerman’s Spac should be registered as an investment company.
“Investment companies are entities whose main business is securities investment. Investing in securities is basically the only thing PSTH has done,” the lawsuit states. If successful, the lawsuit may have a blow to the wider Spac market. Some lawyers told the Financial Times that they expect this to further curb enthusiasm for these vehicles.
Ackerman, the founder of hedge fund Pershing Square, questioned the intent of the lawsuit, suggesting that his Spac has been used as a scapegoat by scholars and lawyers with a broader market reform agenda. He stated that the civil lawsuit was “significantly misleading” in terms of the amount of compensation awarded to Spac’s sponsors.
Ackerman’s new proposal revolves around the structure he created as part of his present Unfortunate transaction Purchase shares of Universal Music Group. PSTH shareholders will recoup their investment of $20 per share and the warrants to purchase shares in their special-purpose acquisition rights company or Sparc.
Sparc, which has not yet received regulatory approval, does not require investors to invest cash before determining the target company, and importantly, it does not operate within the two-year time limit like the traditional Spac.
Ackerman did not elaborate on what will happen if the Sparc structure (which requires rule changes on the New York Stock Exchange) is not approved.
Timing has always been an issue for PSTH. It took PSTH months to finalize the acquisition of a 10% stake in Vivendi’s UMG, and then canceled it after strong opposition from the US Securities and Exchange Commission. Ackerman now has 11 months to find targets for PSTH and 6 months to complete the transaction unless he can switch to Sparc.
When the new proposal came out, PSTH’s share price fell below its initial public offering price for the first time since its launch. He wrote on Twitter on Friday: “If you find yourself on a leaking ship, it’s usually better to change the ship rather than fix the leak to complete the task.”