Benzinga | Jun 15, 2021 04:46PM EDT

Bill Ackman SPAC Deal For Universal Music Group Could Face Battle From Dan Loeb, Among Others

Bill Ackman's plan to acquire 10% of Universal Music Group could face a setback with Vivendi shareholders speaking out against the transaction.

What Happened: Bill Ackman's Pershing Square Tontine Holdings Ltd (NYSE:PSTH) announced a plan to acquire 10% of Universal Music Group, a unit of Vivendi SE (OTC:VIVHY).

Vivendi is hoping to complete a spinoff of Universal Music Group with shareholders owning 60% of the company that will trade on the NYSE Euronext exchange, along with a 10% stake for PSTH, 20% stake for Tencent Holdings ADR (OTC:TCEHY) and a retained 10% stake for Vivendi.

"Selling off pieces of UMG to other investors in return for cash is a sub-optimal capital allocation decision. We would prefer Vivendi spin off its entire ownershipof UMG to the shareholders in a tax-efficient manner," Artisan Partners portfolio manager David Samra told Bloomberg.

Artisan is the 11th largest shareholder of Vivendi and is in preference of a tax-efficient spinoff instead of the planned partial stakes.

"Placing a tax burden on the shareholders of Vivendi through the de-merger process is unattractive. We believe management should find a tax-friendly solution," Samra said.

Another Vivendi shareholder Bluebell Capital Partners is pushing for Vivendi to complete the transaction in a tax-efficient spinoff method. The shareholder has asked France's financial market regulator to look into the pending transaction, Bloomberg reports.

Related Link: Bill Ackman SPAC Announces Universal Music Deal, Could Investors See A #1 Hit?

Why It's Important: Vivendi shareholders are scheduled to vote on the PSTH transaction on June 22. The vote looks to see at least some votes against, with Artisan and Bluebell both speaking out.

Hedge fund Third Point led by Dan Loeb is also a large Vivendi shareholder with Bloomberg reporting a "substantial position" now owned by the firm.

Third Point has been acquiring shares of Vivendi for several months and to date has not made comments on how it feels about the Universal Music Group transaction.

The calls for Vivendi to change the transaction and waiting for Loeb to make statements could lead to terms of the deal being changed or the vote being delayed.

There is also a chance the deal gets voted down, which could send Ackman back to the drawing board for a SPAC merger target.

PSTH Price Action: Shares of Pershing Square Tontine Holdings are trading down 0.58% at $22.47 Tuesday afternoon at publication.

(Photo by Frankie Lopez on Unsplash)