Billionaire hedge fund Bill Ackman is close to striking a deal with him Universal Music Group That would see his blank check company take 10 percent of the record company behind artists such as Lady Gaga and Cyndi Lauper, people briefed on the matter said.
The deal with Pershing Square Tontine Holdings, a record-breaking special-purpose acquisition with its $4 billion listing last year, would value Universal at nearly $40 billion.
As part of the unusual plans, Vivendi is still aiming to distribute other remaining Universal shares to investors through a public listing on Euronext later this year, two people familiar with the situation said. One person said Spac List is being seen as an agent for evaluating Universal Music ahead of this IPO.
The deals come as Vivendi looks to cash in on Universal Music, its prized asset that has benefited from a revival of the music business, drawing investors into the sector.
Ackman beat competition from private equity firm Hellman & Friedman, which offered to buy a 10 percent stake in Universal at a €30 billion valuation, according to a person with direct knowledge of the matter.
Participate in AckmanThe company, listed on the New York Stock Exchange, fell as much as 14 percent in post-close trading, as investors reacted negatively to news of the deal.
Ackman Plumber He is working with his advisers to finalize the terms of the deal, which could take days or weeks to close, people briefed on the matter said.
Last month, Vivendi said it was considering selling an additional 10 percent stake in Universal Music to an unnamed US investor. The French media group, controlled by billionaire Vincent Bollory, has sold 20 percent of Universal to China’s Tencent.
Ackman hinted last month that he might announce a deal in the next few weeks. The investor said he had been working on the deal since early November, adding that he had been “deeply involved” with “creative, fantastic and great work.” Ackman said at the time that the deal involved a lot of complexity.
Music companies have skyrocketed in value in recent years as podcasting services like Spotify have revived faltering businesses, sending billions of dollars in royalty payments to record companies including Universal. In 2013, SoftBank offered to buy Universal Music for only 6.5 billion euros.
Universal, home to businesses like The Beatles, Drake and Taylor Swift, is the world’s largest record label, capturing nearly 30 percent of the market, according to Midia Research estimates.
Spacs, which is raising money through a public listing and is looking for a private company to go public, has become one of the most talked about asset classes on Wall Street. But increased regulatory scrutiny and poor performance dampened investor interest, slowing the number of listings and the volume of transactions.
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