Study of PSTH
- 07/01/2021 – it might be a great idea to invest in PSTH.WS
PSTH SPAC WARRANTS EXPLAINED SIMPLY
WARRANT SPECIFICATIONS
When trading, it is imperative to understand the warrants per unit. For PSTH SPAC Warrants, this is set at 1/9. This means that each unit is one-ninth of one warrant. No fractional units are available, so units must be purchased in multiples of 9 to hold a warrant.
The earliest date that the warrants will become redeemable is 12 months from the date of the SPAC IPO – this was July 22, 2020. So the absolute earliest that the warrants will become exercisable is July 22, 2021. It also has to be 30 days after the completion of a merger, so do bear that in mind!
The exercise price is $23. This means that once exercisable, each warrant will give you the right to buy one share of PSTH at $23 per share in the future, until the warrants expire. Warrant expiration can vary for different SPAC warrants. For PSTH, it is five years after a completed merger, which is fairly common among SPACs. However, there are some exceptions…
WHEN DO THE WARRANTS EXPIRE?
It’s crucial not to let warrants expire if they are in the money or have any value at all. PSTH SPAC warrants can expire in a few ways. The first is, like other SPACs, if the SPAC terminates before a merger. The next two terms are unique to PSTH SPAC warrants.
- If the shares trade $36 or more for 20 out of 30 trading days, the warrants can be redeemed by management.
- If the price per share equals or exceeds $20 for 20 out of 30 trading days, management could also redeem it.
The $36 clause is only unique to PSTH because its SPAC is double the price of other SPACs, which are normally priced at $10. Those $10 SPACs have a similar clause for $18 instead of $36.
- 06/24/2021
- 06/24/2021 – update and timelines
Vivendi’s UMG Spinoff Hits Wrong Notes With Some Investors
All eyes will be on Vivendi SE on Tuesday as the French media conglomerate’s plans to spin off 60% of Universal Music Group go to a shareholder vote.
Vivendi SE’s (ticker: VIVHY) spinoff of UMG—which includes storied recording labels such as Capitol Music Group and Def Jam Recordings, and artists such as Lady Gaga, Taylor Swift, and Billie Eilish—has attracted the ears of the activist community.
Bill Ackman’s special-purpose acquisition company is set to acquire a 10% UMG stake—valuing the label at roughly $40 billion. It’s a departure from the traditional SPAC model because, instead of creating a new publicly traded company, Ackman’s SPAC will distribute Amsterdam-listed UMG stock to shareholders and use the remaining cash to pursue other deals. Even though the deal differs from the usual SPAC structure, it will still be the largest SPAC deal if completed.
Ackman sheds more details on Pershing Square Tontine’s deal for Universal Music
- Many had eyed hedge fund billionaire Bill Ackman’s special-purpose acquisition company since its launch last year as the SPAC rage reached record heights. Word of a deal finally came several weeks ago as Pershing Square Tontine Holdings (NYSE:PSTH) announced an approach for Universal Music Group (UMG), the world’s largest music company. The tie-up would see it take a 10% stake in the company from owner Vivendi (OTCPK:VIVHY) for $4.1B, though Ackman had more details to share about its complicated structure over the weekend.
- After all is said and done, PSTH shareholders will receive publicly traded securities in three separate companies: UMG, PSTH, and SPARC. UMG will be publicly listed on Euronext Amsterdam in September 2021, with shares expected to be distributed to PSTH shareholders before year-end 2021. PSTH will meanwhile continue to seek another business combination under a unit called RemainCo, which will have $1.5B in cash and $1.4B of an unexercised forward purchase agreement. Lastly, investors will receive warrants to purchase shares in another acquisition company called Pershing Square SPARC Holdings, which will soon file a registration statement with the SEC.
- Will the details help allay investor concerns? Shares of PSTH were trading firmly around the $25 level before word of the deal broke on June 3. Since then, the stock has tumbled 10%, trading at levels last seen in November 2020. Ackman was quick to highlight that UMG will be one of the largest companies on the Euronext Amsterdam exchange and will become a member of several major global indices. The statement also emphasized UMG’s operating profit growth of more than 20% per annum since 2017, as well as “powerful endorsements” from investors like Tencent (OTCPK:TCEHY), which own a fifth of the company.
- Pershing Square Tontine’s prospectus from 2020: “We believe that our unique structure and our willingness to acquire a minority interest in a company will help facilitate the completion of a transaction on attractive terms. We are willing to accept a high degree of situational, legal, and/or capital structure complexity in a business combination if we believe that the potential for reward justifies this additional complexity, particularly if these issues can be resolved in connection with and as a result of a combination with us.”
- Last week, Vivendi ADRs rose to session highs on reports that activist Dan Loeb’s Third Point accumulated a “substantial” stake in the French media conglomerate.
Snap gains 2% on license deal with Universal Music
- 06/23/2021 – detailed thesis on PSTH
Complexity Creates Opportunity – Our View on PSTH
- 06/22/2021 = Vivendi investors back UMG spin off
Bollore scores win as Vivendi investors back $39 bln Universal spin-off
- More than 99% of votes in favour of Universal’s spin-off
- Contested share buyback resolution also approved
- Universal could be listed on Sept. 21 in Amsterdam
Two major investors have already invested in Universal.
William Ackman’s Pershing Square Tontine Holdings (PSTH) (PSTH.N), a special purpose acquisition vehicle, has signed a deal to buy 10% of the music business. read more
Prior to this transaction, a consortium led by Chinese giant Tencent (0700.HK) bought a 20% chunk in Universal. read more
Ackman’s investment prompted billionaire and hedge fund manager Daniel Loeb’s Third Point to buy a substantial stake in Vivendi to evaluate the sale of the 10% Universal stake to PSTH, a source familiar with the firm’s holdings said. read more
- 03/30/2021 – The company’s call option price dropped significantly more than the common stock and warrants during the current selloff which created a good entry point
