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Bill Ackman’s Pershing Square nears record $40 billion SPAC deal with Universal Music, source says

Bill Ackman, founder and CEO of Pershing Square Capital Management.

Adam Jeffery | CNBC

Billionaire investor Bill Ackman’s blank-check company is closing in on a deal to take Universal Music Group public in what would be the largest special purpose acquisition company deal ever, a source told CNBC’s Leslie Picker on Thursday.

The potential SPAC merger values Universal Music at roughly $40 billion, according to the source. That would make it the largest SPAC deal ever, Dealogic data shows.

The deal would knock Southeast Asia’s ride-hailing giant Grab’s SPAC merger with Altimeter Growth Corp. out of first place. That deal values Grab at more than $30 billion, according to SPAC Research.

Pershing Square Tontine Holding (PSTH) shares fell more than 8% in extended trading after closing Thursday at $25.05. The SPAC IPO was offered at $20 a share and it started trading in September 2020.

French media company Vivendi is the majority owner of Universal Music. Chinese tech company Tencent is a minority stakeholder.

Blank-check companies are usually formed to raise funds through an IPO to finance a merger or acquisition, typically within two years.

The news came as the SPAC market hit a roadblock on the regulatory front as the Securities and Exchange Commission proposed an accounting rule change that would classify SPAC warrants as liabilities instead of equity instruments. SPAC issuance has slowed down drastically after a record first quarter.

A total of 151 SPAC initial public offerings have already been completed in 2021, raising $47.6 billion, data from SPAC Research shows. There are 289 deals actively looking for targets, according to SPAC Research.

The proprietary CNBC SPAC 50 index, which tracks the 50 largest U.S.-based pre-merger blank-check deals by market cap, has erased its 2021 gains amid heightened regulatory scrutiny and traded about 4% lower on the year.

— CNBC’s Yun Li contributed to this report.

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