Bill Ackman’s SPAC is “Deeply Engaged” in a Transaction

The world’s largest SPAC – Pershing Square’s “tontine” – is “deeply engaged” in a transaction that could close in the next few weeks, according to Bill Ackman.

Ackman is the founder and CEO of Pershing Square Capital Management, an activist hedge fund management company. He spoke on May 12 at the Wall Street Journal’s “Festival of Everything.” He was interviewed by Jamie Heller, the business editor at the Journal.

SPACs have been justifiably labeled as overhyped, bad deals for retail investors. But Pershing Square is the exception. Its tontine SPAC has unique features which align the sponsor’s financial incentives with those of its investors.

Ackman was cautious about discussing the potential deal. But he disclosed that he is talking with a merger-friendly entity. “We will have something people are excited about in a reasonable amount of time,” he said.

The challenge is in finding a suitable deal was not the rise in prices among stocks, he said. It was the nature of the target company and solving the details of a complex transaction.

He said he was looking for a “mature unicorn” or a “super-high quality, durable growth company,” which could be a carveout from an existing corporation. He has $5 billion to spend and is looking for an investment that will deliver multiples of growth in the next decade.

Ackman said the deal he is considering is led by an “iconic management team” that meets all his criteria. “I am cautiously optimistic,” he said and has been focused on this one transaction for a long time.

“Our goal is to solve the problems of the seller,” Ackman said, and to remain a minority shareholder.

There is no certainty a transaction happens until a deal is signed, he cautioned.

Ackman said that Pershing sold its stake in Starbucks because it got to a price where he could not earn the excess return he wanted.

But he disclosed that he now has a 6% stake in Domino’s pizza.