Benzinga - by Ramakrishnan M, Benzinga Editor.
Renowned investor Bill Ackman could be planning an investment in X, the social media platform owned by Elon Musk, through his firm Pershing Square Holdings Ltd (OTC:PSHZF).
What Happened: According to The Wall Street Journal, Pershing Square obtained regulatory approval last Friday for a novel investment vehicle aimed at investing in a privately held company with the intention of taking it public. When queried about the possibility of transacting with X, Ackman’s response was a firm “Absolutely.”
However, the probability of such a deal materializing remains low since Musk bought the company for $44 billion last year and has expressed intentions of possibly taking it public in a few years.
The platform’s ad revenues have dipped under Musk’s leadership, and the acquisition has accrued $13 billion in debt, factors that could potentially dissuade public investors.
Named Pershing Square SPARC Holdings, Ackman’s new investment vehicle is an enhanced form of traditional SPACs. Unlike SPACs, which collect funds from investors before identifying a company to merge with, SPARC permits investors to buy in after a target company has been identified. The development of this vehicle has been under regulatory scrutiny for roughly two years.
Upon receiving approval for SPARC, Ackman posted on X, “If your large private growth company wants to go public without the risks and expenses of a typical IPO, with Pershing Square as your anchor shareholder, please call me. We promise a quick yes or no.”
Pershing Square SPARC Holdings, Ltd.If your large private growth company wants to go public without the risks and expenses of a typical IPO, with Pershing Square as your anchor shareholder, please call me. We promise a quick yes or no. https://t.co/6YXVZm9EgQ
— Bill Ackman (@BillAckman) September 29, 2023
Currently managing $16.5 billion, according to the Journal, Pershing Square has witnessed Ackman’s revival after a string of unsuccessful investments. The firm is recognized for making amicable bets on companies like Hilton and Chipotle.
Why It Matters: The move comes as Ackman and Musk have engaged in public discourse over financial matters in the past on X.
The hedge fund manager took quickly to Musk’s array of changes to Twitter once he bought it and became an early user who paid for verification.
In March, Ackman publicly called for a pause from the Federal Open Market Committee amid a banking crisis, to which Musk responded. Furthermore, Ackman made a pitch on behalf of his investment in Howard Hughes Corp for a potential Tesla headquarters, after Musk threatened to move out of California and to either Texas or Nevada.
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