Two years after establishing the largest special-purpose acquisition company (SPAC) in history, billionaire Bill Ackman concluded that he couldn’t make a deal to meet that need.
and Monday’s letter to shareholdersAcman said he would return the funds for his SPAC, Pershing Square Tontine Holdings. This is because “we were unable to meet our investment criteria and complete a feasible transaction.”
Also known as a blank check company, SPAC uses capital from the open market to invest in private companies and publish in the process. They have two years to find a company to buy before the owner has to return the money to the investor.
This product was Wall Street’s favorite toy during the pandemic, as young companies wanted to quickly become public, taking advantage of their high reputation in the public market. However, it fell out of grace as many of the published companies were frustrated and regulatory agencies focused on the product.
Acman cited these reasons in explaining why his SPAC couldn’t find a deal yet. Given how volatile the public market is now, he said, many “high quality and profitable” companies have postponed listings.
At one point, Acman found the right suitor through a complex deal of buying a minority stake in Universal Music and spinning out two other blank-checked vehicles. But regulators shut their mouths, The plan was abandoned.. later, Proceedings He challenged the basic structure of SPAC. Mr. Acman warned at the time that the threat of proceedings would make it difficult to find another transaction.
He proposed replacing the SPAC with a new blank-checked vehicle called SPARC. SPARC investors do not make upfront payments. Instead, when vehicles announce merger targets, they receive the right to buy in (R on SPARC). This is not subject to time limits.
“I’m disappointed that I couldn’t achieve my original goal of completing a quality transaction,” Acman said in a letter to shareholders. “Opportunity for SPARC to continue working on your behalf.” I’m looking forward to it. It started normally. “
