It was supposed to be the deal that redefined what a blank-check company could do. In the summer of 2021, billionaire hedge fund manager Bill Ackman announced that his special purpose acquisition company, Pershing Square Tontine Holdings, had struck an agreement to acquire 10% of Universal Music Group from French media conglomerate Vivendi for roughly $4 billion. The total transaction, when accounting for the broader structure Ackman envisioned, approached $5.6 billion. It would have been the largest SPAC deal in history.
It fell apart in weeks.
The collapse of the Universal Music deal didn’t just embarrass one of Wall Street’s most prominent investors. It exposed fundamental tensions in the SPAC model, drew pointed scrutiny from the Securities and Exchange Commission, and foreshadowed the broader implosion of the blank-check boom that had consumed capital markets. Three years later, the episode remains a case study in ambition outrunning regulatory reality — and a cautionary tale about the limits of financial engineering, even when wielded by someone with Ackman’s track record.
To understand what went wrong, you have to understand what Ackman was trying to build. Pershing Square Tontine Holdings, or PSTH, raised $4 billion in its July 2020 initial public offering, making it the largest SPAC ever at the time. The structure was unusual. Ackman designed it with features meant to address some of the most common criticisms of SPACs — excessive dilution, misaligned incentives between sponsors and public shareholders, and the tendency for deals to benefit insiders at the expense of retail investors. He called it a more shareholder-friendly vehicle. The market responded enthusiastically; shares traded well above their $20 trust value for months as investors speculated about which company Ackman would acquire.
The answer came in June 2021. Not a traditional SPAC merger, though. Instead, Ackman proposed that PSTH would buy a minority stake in Universal Music Group ahead of Vivendi’s planned spinoff and listing of the music giant on the Amsterdam stock exchange. UMG, home to artists ranging from Taylor Swift to The Weeknd, was one of the most coveted assets in media. Ackman argued that the deal gave PSTH shareholders access to a world-class business at an attractive valuation. As The Next Web reported, the proposed transaction valued Universal Music Group at approximately €35 billion, or around $42 billion at the time.
But the structure was extraordinarily complex. PSTH wouldn’t simply merge with Universal Music — it couldn’t, since it was acquiring only a 10% stake. Instead, Ackman devised a three-part transaction. PSTH would use roughly $4 billion of its trust to buy the UMG shares, which would then be distributed directly to PSTH shareholders. The remaining SPAC shell — now without its trust assets — would continue to exist and seek a separate acquisition target. And Ackman planned to create an additional entity, Pershing Square SPARC Holdings, which would give shareholders the right but not the obligation to invest in a future deal. It was a Rube Goldberg machine of corporate finance.
Wall Street was initially intrigued. Then confused. Then skeptical.
The SEC had questions almost immediately. The agency pushed back on whether the proposed transaction actually qualified under the rules governing SPACs. A blank-check company is supposed to merge with or acquire a business, not simply buy a passive minority stake and distribute shares. The distinction mattered enormously from a regulatory perspective. If PSTH was essentially functioning as an investment fund buying securities, it might need to register under the Investment Company Act of 1940 — a classification that carries onerous restrictions and would have fundamentally altered the vehicle’s economics.
Ackman pushed back publicly, insisting the deal was legal and appropriate. But behind the scenes, the regulatory friction proved insurmountable. On July 19, 2021 — barely a month after the announcement — Ackman pulled the plug. In a letter to shareholders, he acknowledged that the complexity of the transaction structure had created “uncertainty” with the SEC and that continuing to pursue the deal risked delays that could jeopardize the entire arrangement with Vivendi.
The timing was brutal. Vivendi proceeded with its spinoff of Universal Music Group in September 2021, and UMG shares surged on their first day of trading in Amsterdam. Investors who would have held UMG stock through PSTH watched from the sidelines. PSTH shares, which had been trading above $30 during the height of deal speculation, cratered.
And then came the lawsuits.
PSTH shareholders filed a class action complaint alleging that the company had effectively operated as an unregistered investment company, echoing the SEC’s apparent concerns. The litigation argued that PSTH’s structure and the proposed UMG transaction crossed the line from a legitimate acquisition vehicle into something resembling a pooled investment fund — a distinction with serious legal consequences. Ackman and his team denied the allegations, but the legal battle dragged on and added to the reputational damage.
The broader context matters here. The SPAC market in 2021 was already showing cracks. Hundreds of blank-check companies had gone public in 2020 and early 2021, many sponsored by individuals with little deal-making experience, targeting companies with speculative business models and aggressive financial projections. The SEC, under then-newly-appointed Chair Gary Gensler, was ramping up scrutiny. New proposed rules around SPAC disclosures, liability for financial projections, and the classification of certain SPAC structures as investment companies were all in the pipeline. Ackman’s deal, despite his pedigree, walked directly into this regulatory buzz saw.
What made the failure particularly stinging was that Ackman’s read on Universal Music Group as an asset was exactly right. UMG has performed well as a public company, benefiting from the continued growth of streaming revenue and the enduring value of its music catalog. The business Ackman wanted to buy for PSTH shareholders at a €35 billion valuation was, by many measures, a bargain relative to where the company traded in subsequent years. The investment thesis was sound. The execution vehicle was the problem.
PSTH never completed any acquisition. In July 2022, Ackman announced that the SPAC would return its approximately $4 billion in trust to shareholders and dissolve. It was an ignominious end for what had been billed as a reinvention of the SPAC model. Ackman’s Pershing Square Capital Management absorbed roughly $70 million in costs associated with the failed venture, according to regulatory filings.
Ackman, characteristically, didn’t retreat quietly. He pivoted to the SPARC concept — a vehicle that would raise capital only after identifying an acquisition target, eliminating the pressure of a ticking SPAC deadline and the risk of holding billions in trust with no deal in sight. The idea had theoretical elegance: shareholders would receive rights to participate in a future deal but wouldn’t have to commit capital upfront. The SEC, however, was slow to approve the SPARC structure, and Ackman spent years in regulatory limbo trying to get the concept off the ground.
The Universal Music saga also illuminated something about Ackman himself. He is a dealmaker who thinks in grand structural terms — someone who doesn’t just want to buy a company but wants to redesign the mechanism through which the purchase happens. This instinct has produced some of his greatest successes, including the restructuring of General Growth Properties during the financial crisis. But it has also led to spectacular misfires, from his disastrous short bet against Herbalife to the PSTH debacle. The common thread is a willingness to build elaborate constructions around a core investment thesis, sometimes at the cost of simplicity and executability.
Since the PSTH collapse, the SPAC market has contracted dramatically. New SPAC IPOs fell from 613 in 2021 to just 86 in 2022 and continued declining. Many SPACs that did complete mergers saw their shares collapse post-deal, destroying value for public market investors. The SEC finalized new rules in early 2024 that increased disclosure requirements and extended liability protections to SPAC investors, changes that many in the industry trace directly to the excesses of the 2020-2021 boom.
Ackman, meanwhile, has shifted his public ambitions. In 2024, he explored taking Pershing Square Capital Management itself public through a U.S.-listed closed-end fund structure, a move that would give retail investors direct access to his hedge fund’s portfolio. That effort, too, encountered complications — Ackman scaled back the planned size of the offering amid tepid investor demand. The pattern rhymes with PSTH: a bold structural innovation, enormous initial hype, and a humbling collision with market or regulatory reality.
The Universal Music Group deal that never was remains one of the most fascinating what-ifs of recent financial history. Ackman identified the right asset at the right time. He had $4 billion in committed capital and a willing seller in Vivendi. The music industry was entering what many analysts now describe as a golden era of streaming-driven growth. Everything aligned — except the vehicle.
SPACs were designed to take private companies public through reverse mergers. Ackman tried to use one to buy a minority stake in a company that was about to go public anyway, through a multi-layered structure that the SEC couldn’t square with existing regulations. It was, in the end, a case of trying to fit a square peg into a round hole with enough financial engineering to obscure the mismatch.
The lesson isn’t that SPACs are inherently flawed, though the post-boom wreckage suggests serious structural problems. And it isn’t that Ackman lacks investment acumen — his track record at Pershing Square, particularly in recent years, has been strong. The lesson is narrower and more specific: regulatory constraints are not obstacles to be engineered around. They are boundaries that define what is possible. Ackman, for all his brilliance, learned that the hard way. So did the thousands of retail investors who bought PSTH shares above $30, expecting a piece of the world’s largest music company, and got their $20 back instead.
Universal Music Group, for its part, has thrived without Ackman. The company reported €5.8 billion in revenue for the first half of 2024, driven by subscription streaming growth and strong performance from its recorded music and publishing divisions. Its market capitalization has fluctuated but remains well above the valuation at which Ackman proposed to buy in. The music played on. The SPAC did not.
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