Bill Ackman to Terminate PSPC After Failing to Find Target Company: What Happens to Shareholder Funds?
Pershing Square Tontine Holdings Ltd PSTH, a special purpose acquisition company (SPAC) promoted by hedge fund manager Bill Ackman, said on Monday it would return $4 billion in capital in trust to shareholders.< /p>
What happened: The decision to dissolve the blank check company comes about two years after its IPO, when its goal was to merge with a large private company capitalization and make it public. investment criteria for "the quality of the company, sustainable growth and an attractive valuation".
SPAC was unable to complete a transaction that met its "investment and executable criteria," the company said in a letter to shareholders.
A SPAC uses funds raised in the public market to invest in a private company and take it public. These companies have up to 24 months to implement a business combination.
Because Pershing Square Tontine was unable to meet the stipulations, it announced that it would repurchase all of its outstanding Class A common stock, effective July 26. Net of taxes, the company expects the redemption price per share of the shares will be $20.05.
SPAC listed on the NYSE on September 11, 2020 at $22 and closed the first session at $21.60.
Related link: Bill Ackman steps up call for a quick Fed rate hike to curb inflation
Why it matters: The SPAC phenomenon peaked during the COVID-19 pandemic and was used by private companies to take advantage of high public market valuations. With several companies taking the SPAC route for floundering public listing and heightened regulatory scrutiny, SPACs have since lost their appeal.
Pershing Square Tontine has previously identified Universal Music Group N.V. UNVGY as a "highly attractive target", but was forced to drop the suit due to structural and legal requirements from parent company Vivendi imposing an unconventional transaction structure for SPACs. The SEC had raised concerns about such a deal.
Pershing attributed the decision to ax SPAC to the "extremely poor performance" of SPACs that closed deals, high reimbursement rates, and the risk and uncertainty created by litigation filed against him, as well as the new SPAC rules proposed by the SEC on March 30.
Ackman planned to replace the SPAC with a new blank check vehicle called SPARC - Special Purpose Acquisition Rights Company. This provides for the free sale of rights to investors and invites investors to pay when they focus on a goal. The delay does not apply to a SPARC.
Price Action: Pershing Square Tontine closed Monday's session with little change at $20 and added 0.30% to $20.06 in after-hours trading, according to data from Benzinga Pro.
Photo via Center for Jewish History on Flickr
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Pershing Square Tontine Holdings Ltd PSTH, a special purpose acquisition company (SPAC) promoted by hedge fund manager Bill Ackman, said on Monday it would return $4 billion in capital in trust to shareholders.< /p>
What happened: The decision to dissolve the blank check company comes about two years after its IPO, when its goal was to merge with a large private company capitalization and make it public. investment criteria for "the quality of the company, sustainable growth and an attractive valuation".
SPAC was unable to complete a transaction that met its "investment and executable criteria," the company said in a letter to shareholders.
A SPAC uses funds raised in the public market to invest in a private company and take it public. These companies have up to 24 months to implement a business combination.
Because Pershing Square Tontine was unable to meet the stipulations, it announced that it would repurchase all of its outstanding Class A common stock, effective July 26. Net of taxes, the company expects the redemption price per share of the shares will be $20.05.
SPAC listed on the NYSE on September 11, 2020 at $22 and closed the first session at $21.60.
Related link: Bill Ackman steps up call for a quick Fed rate hike to curb inflation
Why it matters: The SPAC phenomenon peaked during the COVID-19 pandemic and was used by private companies to take advantage of high public market valuations. With several companies taking the SPAC route for floundering public listing and heightened regulatory scrutiny, SPACs have since lost their appeal.
Pershing Square Tontine has previously identified Universal Music Group N.V. UNVGY as a "highly attractive target", but was forced to drop the suit due to structural and legal requirements from parent company Vivendi imposing an unconventional transaction structure for SPACs. The SEC had raised concerns about such a deal.
Pershing attributed the decision to ax SPAC to the "extremely poor performance" of SPACs that closed deals, high reimbursement rates, and the risk and uncertainty created by litigation filed against him, as well as the new SPAC rules proposed by the SEC on March 30.
Ackman planned to replace the SPAC with a new blank check vehicle called SPARC - Special Purpose Acquisition Rights Company. This provides for the free sale of rights to investors and invites investors to pay when they focus on a goal. The delay does not apply to a SPARC.
Price Action: Pershing Square Tontine closed Monday's session with little change at $20 and added 0.30% to $20.06 in after-hours trading, according to data from Benzinga Pro.
Photo via Center for Jewish History on Flickr
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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