Bill Ackerman’s Spac is close to buying a 10% stake in Universal Music

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According to people familiar with the matter, hedge fund billionaire Bill Ackerman is about to reach an agreement with Universal Music Group that his blank cheque company will acquire a 10% stake in the record company behind artists such as Lady Gaga and Cyndi Lauper.

The deal with Pershing Square Tontine Holdings, which was listed for US$4 billion last year, will bring Universal’s valuation to approximately US$40 billion.

As investors reacted negatively to the trading news, the shares of Ackerman’s companies listed on the New York Stock Exchange fell by 14% in after-hours trading.

People familiar with the matter said that Ackerman’s special purpose acquisition company Spac is working with his advisers to finalize the terms of the transaction, which may take days or weeks to complete.

Last month, Vivendi said it was considering selling a 10% stake in Universal Music to an unnamed US investor. The French media group controlled by billionaire Vincent Bolloré has previously sold a 20% stake in Global to China’s Tencent.

At the time of this transaction, Vivendi was seeking to squeeze funds from Universal Music, which is a valuable asset that benefits from the recovery of the music business. According to estimates by Midia Research Research, Universal Music is home to bands such as the Beatles, Drake and Taylor Swift, and is the world’s largest record company, accounting for nearly 30% of the market.

Ackerman hinted last month that he might announce an agreement in the coming weeks. The investor stated that he had been processing the transaction since early November, adding that he was “deeply involved” in a “signature, extraordinary, and great business.” Ackerman said at the time that the transaction involved a lot of complexity.

In recent years, the value of music companies has soared as audio streaming services such as Spotify have revived troubled businesses and paid billions of dollars in royalties to record companies including Universal. In 2013, SoftBank proposed to acquire Universal Music for only 6.5 billion euros.

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