Pershing Square Tontine Holdings, Ltd. (NYSE:PSTH) CEO Bill
Ackman today issued the following letter:
Dear Pershing Square Tontine Holdings, Ltd. Shareholder,
On July 22, 2020, Pershing Square Tontine Holdings, Ltd.
completed a $4 billion IPO on the New York Stock Exchange. We
designed PSTH to be the most investor and merger-friendly SPAC at a
time when we believed the COVID-19 pandemic would continue to
disrupt capital markets providing PSTH with an opportunity to merge
with and take public a large capitalization private company that
met our investment criteria for business quality, durable growth,
and an attractive valuation.
Two years later, we are returning our $4 billion of capital in
trust to shareholders as we have been unable to consummate a
transaction that both meets our investment criteria and is
executable.
When we completed the IPO of PSTH, we expected our scale and
efficient capital structure would create bespoke opportunities for
high-quality, large capitalization companies seeking an efficient
and highly certain path to go public. We launched PSTH in the
depths of the pandemic because we believed that the capital markets
would likely be impaired from the economic uncertainty created by
the pandemic. The rapid recovery of the capital markets and our
economy were good for America but unfortunate for PSTH, as it made
the conventional IPO market a strong competitor and a preferred
alternative for high-quality businesses seeking to go public.
Despite these unfavorable market conditions for PSTH, we were
fortunate in quickly identifying and engaging with a highly
attractive target, Universal Music Group, that met all of our
investment criteria. The circumstances of UMG’s public listing and
the requirements of the company’s controlling shareholder, Vivendi,
made PSTH an ideal transaction partner, as our scale, structure,
and sponsorship addressed our counterparties’ unique
requirements.
Unfortunately, Vivendi’s structural and legal requirements
dictated a transaction structure that was somewhat unconventional
for SPACs, and ultimately, one that could not be consummated given
concerns raised by the SEC. As a result, the board terminated the
transaction and assigned its obligation to acquire UMG to the
Pershing Square Funds. The Funds in turn assumed the UMG
transaction costs and the related Vivendi indemnity obligations so
that PSTH would be returned to its original position to enable it
to immediately pursue a new transaction, albeit with one year
remaining to do a deal. We thereafter immediately went back to work
to find a replacement transaction.
We have been unsuccessful in consummating a deal over the last
year largely due to the adverse market for SPAC merger transactions
which has been driven by: (1) the extremely poor performance of
SPACs that have completed deals during the last two years which has
damaged market perceptions of going public by merging with a SPAC,
(2) the high redemption rates of SPACs which has reduced the
capital available for the newly merged company, increased the
dilution from the shareholder warrants that remain outstanding, and
heightened transaction uncertainty, and (3) risk and uncertainty
created by the Investment Company Act litigation brought against
PSTH, particularly when coupled with new SPAC rules proposed by the
SEC on March 30, 2022.
High quality and profitable durable growth companies can
generally postpone their timing to go public until market
conditions are more favorable, which limited the universe of
high-quality possible deals for PSTH, particularly during the last
12 months. While there were transactions that were potentially
actionable for PSTH during the past year, none of them met our
investment criteria.
With the SPAC and IPO market effectively shut today, now is a
highly opportunistic investment environment for a public
acquisition vehicle which does not suffer from the negative
reputation of SPACs. With this in mind, as we have previously
explained, we are working diligently to launch Pershing Square
SPARC Holdings, Ltd., a privately funded acquisition vehicle which
intends to issue publicly traded, long-term warrants called SPARs,
which will offer SPAR owners the opportunity to acquire common
stock in the newly merged company, the outcome of a business
combination between SPARC and a private company. The SPARC
structure has many favorable attributes compared with conventional
SPACs that should increase the probability a transaction can be
executed on favorable terms.
We intend to distribute SPARs to PSTH security holders who own
either Class A Common Stock (ticker: PSTH) or warrants (ticker:
PSTH.WS) as of the close of business on July 25, 2022 (the last
date such instruments are redeemed or cancelled): ½ of a SPAR for
each share of common stock and one SPAR for each warrant. The
timing of the SPAR distribution will be determined by reference to
the date SPARC’s registration statement becomes effective, which we
would not expect to occur until Fall 2022.
SPARC filed a revised registration statement with the SEC on
June 16th containing detailed information, risk factors, and other
disclosures about SPARC which can be found at www.sec.gov. SPARC’s
registration must become effective in order for SPARs to be issued,
and there is no certainty that this will occur. You can be assured
that we are working extremely diligently to achieve this important
objective for all of PSTH’s shareholders and warrant holders.
We are disappointed that we did not achieve our initial
objective of consummating a high-quality transaction for PSTH. We
look forward to the opportunity to continue to work on your behalf
once SPARC is successfully launched.
We are extremely grateful for your partnership and patience over
the past two years.
Sincerely,
William A. Ackman Chief Executive Officer
Important Additional Information and Where to Find It
This press release does not constitute an offer to sell or buy
or the solicitation of an offer to buy or sell any securities. This
communication is not a recommendation to buy, sell or exchange any
securities, and it is neither an offer to purchase nor a
solicitation of an offer to sell securities. Information about PSTH
and certain of the matters discussed in this press release is
available at the SEC’s website at www.sec.gov.
Forward-Looking Statements
This press release contains certain forward-looking statements
within the meaning of the federal securities laws. These
forward-looking statements generally are identified by the words
"believe," "project," "expect," "anticipate," "estimate," "intend,"
"strategy," "future," "opportunity," "plan," "may," "should,"
"will," "would," "will be," "will continue," "will likely result,"
and similar expressions. Forward-looking statements are
predictions, projections and other statements about future events
that are based on current expectations and assumptions and, as a
result, are subject to risks and uncertainties. Many factors could
cause actual future events to differ materially from the forward
looking statements in this release. You should carefully consider
these and the other risks and uncertainties described in PSTH’s
annual report on Form 10-K and other documents PSTH has filed with
the SEC. Those filings identify and address other important risks
and uncertainties that could cause actual events and results to
differ materially from those contained in the forward-looking
statements. Forward-looking statements speak only as of the date
they are made. Readers are cautioned not to put undue reliance on
forward-looking statements, and PSTH assumes no obligation and does
not intend to update or revise these forward-looking statements,
whether as a result of new information, future events, or
otherwise. PSTH does not give any assurance that PSTH will achieve
its expectations. The inclusion of any statement in this press
release does not constitute an admission by PSTH or any other
person that the events or circumstances described in such statement
are material.
About Pershing Square Tontine Holdings, Ltd.
Pershing Square Tontine Holdings, Ltd., a Delaware corporation,
is a blank check company formed for the purpose of effecting a
merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination with a private
company. PSTH is sponsored by Pershing Square TH Sponsor, LLC (the
“Sponsor”), an affiliate of Pershing Square Capital Management,
L.P., a registered investment advisor. For additional information:
www.PSTontine.com
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version on businesswire.com: https://www.businesswire.com/news/home/20220711005889/en/
Media: Fran McGill 212-909-2455 McGill@persq.com
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