Billionaire investor Bill Ackman's special purpose acquisition company is closing in on a deal to take a 10% stake in Universal Music Group that would value the company at around $40 billion, Reuters reported Friday.
The SPAC is controlled by Ackman and would be used to snap up Universal Music in one of the biggest deals of its kind. Both The Wall Street Journal and Reuters named Pershing Square Tontine Holdings Ltd. as the likely buyer.
Pershing Square didn't immediately comment.
Vivendi, the France media company, is the majority owner of UMG. Tencent, the China technology company, is a minority stakeholder, CNBC said.
The deal could be announced in the next few weeks, though it is not final and might still fall apart, sources who requested anonymity because the talks are confidential, said.
Blank-check companies, or SPACs, are usually created to raise funds through an initial public offering to finance a consolidation or acquisition, normally within two years.
That blank check framework provides an alternative to a traditional public offering, and is currently growing in popularity on Wall Street.
"We've been working on a transaction since early November. We're either going to get a transaction done in the next...short term - weeks - or we'll be onto the next one" Ackman said at a Wall Street Journal conference last month.
The Pershing-UMG deal exceeds the approximately $35 billion that Singapore's ride-hailing company Grab Holdings Inc. was valued at in a similar merger recently, Dealogic said.
UMG is the record label behind singers Taylor Swift, Lady Gaga, Billie Eilish and the Weeknd. Its stable also includes classic acts like the Beatles and Queen. Last year, Universal acquired Bob Dylan's entire publishing catalog.
