SPAC & IPO Ideas

Will be interesting to see what happens tomorrow

I had GTC orders set for 22 and 21.50 for months. Neither executed in the panic, as I hadn't set to GTC-EXT. #sadpanda

This seems like a solid deal to me. Devil will be in the details for valuation / % ownership etc.

Sanrith Descartes to your above comment: Been reading UMG has some crazy $2B ownership stake in Spotify already.

Article from last year re UMG / Spotify (old valuation).

This more-than-doubling of Spotify’s public valuation is good news for Universal Music Group. As previously reported by MBW, a financial filing by Spotify in Europe dating back to 2008 shows that Universal acquired a 5% stake in the streaming company’s launch phase, with EMI – later itself acquired by UMG – taking 2%.

Universal’s subsequent 7% share is believed to have been cut in half over the years due to dilution caused by SPOT’s fund-raising, giving UMG an approximate 3.5% stake in Spotify today.

That 3.5% stake was worth $759m on March 16. Today, it’s worth over $1.6bn.

Click to expand...

Also re UMG: What is this? An actual profitable company for a spac acquisition?

This guy right here. (He used the same phrase referring to PSTH1 holders getting first dibs on PSTH2 at nav)

What the? Reading some crazy stuff.
PSTH to remain a publicly traded ticker. Current owners get UMG shares, plus 1.5B leftover in PSTH to find a second target!? We get a 2 for 1 deal here??

PSTH Investor Relations Press Release:

Proposed Transaction

PSTH shareholders will own three separately traded securities following the completion of the Transaction and the issuance of rights by SPARC:

(1) their pro‐rata share of UMG Ordinary Shares, which at cost, including transaction expenses, represents approximately $14.75 per PSTH share, before accounting for any dilution from PSTH Distributable Redeemable Warrants (the “Redeemable Warrants”);

(2) their pro‐rata share of PSTH after the distribution of the acquired UMG shares (“PSTH Remainco”), which will have approximately $5.25 in cash per share, before accounting for any dilution from PSTH Distributable Redeemable Warrants; and

(3) one transferable five‐year right per share (a “SPAR”) of Pershing Square SPARC Holdings, Ltd. (“SPARC”), which is expected to trade on the New York Stock Exchange.

Click to expand...

3 for 1 deal? This is going to get a lot of press and attention today. PSTH shares are up in European markets.

Fuck me, Ackman redefining the SPAC game.

SPARC gives PSTH common owners rights at $20 nav with no opportunity cost! Exercisable only after a DA. So, no locked up capital and you will actually know the target before exercising the $20? Rolls forward into future SPARCs?

Man, this is a lot to digest, but seems like a hell of a deal.

(Details on page 4 of the press release I posted above)

This is the ELI5 version:

PSTH DEAL BREAKDOWN​

First of all, we got a menu.

The burger: UMG (Universal Music Group)
But this burger is special. We are getting a premium burger, not the dollar one. UMG will IPO on the Amsterdam Exchange in 2021 Q3. We will actually get the pre-IPO shares. This is very bullish imo. Why? Look at all the recent IPO's, they all go to the moon. The valuation? Seems good, even very good. If 35 billion EURO is a fair valuation, then he actually underpaid them. He paid 3,3 billion EURO to get 10% of something that is worth 35 billion EURO. So he got a discount of 200 million EURO.

The fries: the warrants.
We all know what this is so I won't explain this here. If you're new, then I suggest having a look at the warrant topic.

The drink: access to PSTH2 aka SPARC .
How? You get the right to access SPARC 1 share of SPARC at NAV (20$) for each share of PSTH you own. So it's 1:1. This is cool, SPARC will be even bigger than PSTH, twice as big! "SPARC Will Have Up to $10.6 Billion for its Business Combination"

But hold up. There is more. You can't eat your fries without sauce, right? Bill actually gave us some BBQ sauce. You probably noticed that he didn't use all of the 5 billion dollars. That's right, he didn't. So what will he do with all this excess cash? This will go to PSTH Remainco. We will get shares. This is not a SPAC anymore (under the NYSE listing rules). This doesn't mean that Bill can't merge with other companies, he can continue elephant hunting for this one TOO (remember, we get access to SPARC).

Disclaimer about the drink, the ingredients.
This won't be a typical SPAC, others won't be able to buy SPARC before there is a DA. So the only way to get access to SPARC is through PSTH. Also, there won't be a 2-year time limit. This will be a long-term hold but oh boy it will be worth it.

Enjoy your meal!

The big question I have here is, UMG will trade in a Q3 IPO, but on an Amsterdam exchange. Not a US listed company? How does that even work with a US brokerage? Does this trading on a Euro exchange have obvious negatives vs trading on US exchanges?

Sanrith Descartes Blazin