Money Stuff: SPACs Can Shoot Out SPARCs

We talked on Friday about Pershing Square Tontine Holdings Ltd., Bill Ackman’s special purpose acquisition vehicle, which will fission into three SPAC-like things: It will do a somewhat SPAC-ish deal with Universal Music Group BV and distribute Universal shares to its investors, it will keep some cash around in a “Remainco” that will try to do another acquisition, and, most interestingly, it will emit a SPARC. Pershing Square explains:

Pershing Square Tontine Holdings will distribute the SPARs — the SPARC rights — to its existing shareholders, so they can have first dibs on the next big deal that Ackman does. As I said on Friday, this strikes me as a cool idea. For one thing, it is in some ways a better product, for investors, than a SPAC: Instead of locking up money for up to two years while a SPAC hunts for a deal (and then maybe taking it back if they don’t like the deal), SPARC investors don’t put up any money until the SPARC finds a deal.[1]