A few weeks ago, Ackman’s mega-SPAC retreated from a wild proposal to acquire a minority stake in Universal Music Group. The deal received mixed reviews from investors, but was downright rejected by regulators — and not because regulators hate the idea of a SPAC buying a stake in Big Music, but because the deal structure was headache-inducing.
Since then, investors have felt burned. One lawsuit claims Ackman’s Pershing Square Tontine Holdings SPAC is an “illegal investment company.” With that cloud looming over the SPAC, Ackman is asking for a do-over. He wants to return the $4 billion he raised from investors and explore something else…
Giving back the money is the easy part. $PSTH shareholders will get back $20 per share from the company’s trust. But Ackman wants to (partially) revive one of the redeemable parts from the first deal: the SPARC.
A SPARC, or special purpose acquisition right company, is kind of like a SPAC… but not. A SPARC would give $PSTH shareholders a warrant in a new entity, with the right to exercise if they like the acquisition target.
That might not be relevant now, but once Ackman entices a new company, SPARC warrants could be redeemed by former $PSTH shareholders to “get in on the ground floor” of said company.
It sounds better than a SPAC at face value… but there’s a caveat: a SPARC is a completely new thing, and it would require changes to NYSE rules and the approval of the SEC. Like we said, the $20 isn’t the hard part… the gift on the way out is. We’re keeping an eye out for Ackman’s Final Act.