The company's goal, which would be listed on the New York Stock Exchange under the ticker symbol PSTH, is to raise at least $ 3 billion and perhaps as much as $ 6.45 billion. It would be the largest blank check deal in history.
Pershing Square said it hopes to use the new shares to buy a "ripe unicorn," one of "numerous high-quality business-backed businesses" with "significant scale, market share, competitive dominance and cash flow."
According to research firm CB Insights, there are several well-known private companies with valuations in the range of $ 3 billion to $ 6.45 billion.
The list of such unicorns includes Amazon (AMZN)Rivian, backed electric trucking company, Impossible Foods, online gaming firm Roblox, SoFi, Vice Media and Magic Leap.
"Many of these companies have chosen to remain private, as until recently there was limited pressure from their investors to obtain liquidity and large amounts of growth capital available from investors, mutual funds and hedge funds," Pershing Square said in his presentation. .
Ackman, who is famous for being an activist investor, has generated huge profits from the stakes in Wendy & # 39; s (WEN), Starbucks (SBUX) and Chipotle (CMG). But you've lost a lot by shortening (that is, investing in a stock hoping the price will drop) the nutritional supplement company Herbalife (HLF) and betting on a change in retailer JCPenney (which is now bankrupt).
Ackman also lost in a controversial investment in Valeant Pharmaceuticals, a company that was criticized for increasing drug prices and also had accounting problems. Ackman sold its stake in Valeant in 2017. Since then, the company changed its name to Bausch Health companies. (BHC)
More recently, Ackman sparked controversy after making a profit of $ 2.6 billion earlier this year by guarding against a market crash, after doing interviews asking President Trump to shut down the economy for a month because he thought "hell is coming "due to the COVID-19 Outbreak.
But Ackman appears to be more optimistic now, as he is ready to dive into the new offer market.
SPAC or IPO? That is the question
Blank check signatures, also known as special-purpose acquisition companies (SPAC), have become popular ways for private companies to make their Wall Street debut in recent years.
galactic virgin (SPCE), DraftKings and the electric truck company Nikola have been made public through mergers with SPAC.
Another SPAC called Landcadia Holdings II announced on Monday that it will buy the online casino company Golden Nugget Online Gaming. When the deal is closed, Golden Nugget will be marketed under the symbol GNOG.
More companies are willing to go public this way, said Jim Ross, president of Fusion Acquisition Corp, a SPAC looking to buy a financial technology company, which went public on Friday.
Ross noted in an interview with CNN Business that it is easier for private companies to make a SPAC deal public than an IPO, and his company is having multiple conversations with possible targets.
Still, some private companies may choose to sell new shares. The traditional initial public offering market has recovered recently as the broader stock market has recovered.
Recent successful debuts include Warner Music Group, online car salesman Vroom, commercial database company ZoomInfo and various biotechnologies.
But Pershing Square Tontine called "the inherently uncertain and risky IPO process" in its presentation. Uber (UBER) and Lyft (LYFT) They are high-profile examples of so-called mega unicorns that failed to live up to considerable exaggeration.
Pershing Square also cited significant upfront costs and regulatory hurdles as factors that "have discouraged many large private companies from trying to execute public offerings in the current environment."
Since many of these "mature unicorns" have been hit hard by the Covid-19 pandemic, a public offering could help them provide them with fresh new capital, the company added in the presentation.
But Pershing Square said it's not limited to just looking for unicorns. The company said in its presentation that companies owned by large private equity firms and large family businesses could benefit from a merger with SPAC.