PSTH Merger Announced. Will 212 be able to provide support for the entire deal?

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1

I hope a Trading 212 team member can answer what will happen to T212 holders of PSTH. PSTH shareholders are supposed to end up holding 3 different securities are the transaction is done:

  1. pro-rata of UMG Ordinary Shares (approx. $14.75 per PSTH share before dilution)
  2. pro-rata share of ā€œPSTH Remaincoā€ which will have approx. $5.25 in cash
  3. one transferable five-year right per share of Pershing Square SPARC Holdings, Ltd. expected to trade on NYSE

My main concern are with points 1 and 2. I hope that we get both stocks, not cash for one of them.

Any information about how this transaction will be handled would be appreciated.

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2

Slightly off topic, but I hadnā€™t heard the news about the merger previously. Admittedly I donā€™t know much about Universal Music as a business but I would be very disappointed, especially after the likes of Stripe and Airbnb were mooted initially.

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3

What valuation does this put on Universal? I canā€™t seem to find anything definitive.

5

I think a 40 billion euros EV

6

I would much rather a cash generative business with a genuine moat over AirBnB, so I donā€™t think that is an issue.

I agree, Stripe would have been better, but also would probably have had a worse valuation (i.e. be paying a lot more for its growth story).

I think UMG will still have strong growth over the next 10 years, while diversifying my portfolio nicely. Iā€™m fairly happy.

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7

+1, also Iā€™m also quite concerned with point 3, it would be very bad to loose access to SPARC rights.

Also receiving the cash is worse from a tax perspective.

If itā€™s not possible, how can we move our positions to Interactive Brokers or TastyWorks?

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8

Universal generate some nice revenue, albeit with slow YOY growth.

My main worry is ā€œthe storyā€ isnā€™t there, so itā€™ll just get dumped as most investors probably just saw Ackman with a SPAC so invested in it.

Could be wrong though, at least they have revenues, not looked in details to see if theyā€™re profitable in fairness.

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9

Feel like PSTH missold the brief a bit there. ā€˜Mature Unicornā€™? ā€¦Really?

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10

My thoughts exactly. Looks like itā€™s down about 7% pre-market, glad I offloaded it a while back!

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12

@David @Rumen @Y.M @Bogi.H @Hris.M @Tony.V

Can someone please confirm if T212 will be able to support this?

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13

Hey guys :wave:

Weā€™ve been monitoring the topic closely, however, at this stage, there is not sufficient information in order for us to move forward, as the merger has not been deemed official. Nonetheless, we will continue to follow the developments further and will definitely keep you posted!

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14

New to warrants (or SPARs and the like), so excuse me if this is a non-sense question:
In case T212 just sells the warrants on our behalf, if one was really interested in those, you could simply buy them back (using another broker, I assume). Youā€™d only loose the spread and a bit of conversion fees. Or not?
And also, how do you know that T212 supports rights?

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Anyone know if FreeTrade or Degiro can support the transaction?

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I am also quite heavily invested in this ( starting a position from September 2020 ) and although very different from what we initially thought, it would be brilliant if we were able to proceed with all the scenarios to play out here!

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Little, non-surprising update over from Reddit (Link):

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In other words: Adios 2/9 warrants? Adios SPARC rights?

Edit: Found this Barronā€™s article so far the best one for explaining the current state of things at PSTH.

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19

Barons article above makes it nice and clear the 3 steps. Hopefully T212 has the technology same as BA else weā€™ll all lose warrant value and SPARC rights :thinking:

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20

Iā€™d be very surprised if it was otherwise guys, warrants have never been a thing on here.

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21

Got it - we Tortwarts should have checked with T212 before buying any PSTH shares on here. :poop:
I guess somewhere in the terms itā€™s stated that T212 does not support warrants and the like.

Curious though: If I get this right, T212 is purchasing those shares from some other, primary market maker (IBKR?). And that partner is not issuing i.e. the 2/9 warrant right to T212 along with the share? How can that be? Shouldnā€™t it be forbidden for that partner to offer such stock at all?

22

I literally have no idea, youā€™ll have to ask them the ins and outs. But it is what it is when using a service that you donā€™t pay for.

And like most free stuff in life, there is some compromise.

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24

Ideally, what Iā€™d like to see happen through Trading 212;

  1. We get our PSTH 1:1 equivalent in UMG shares.

  2. Warrants are not supported so we get the cash equivalent.

  3. We retain our existing PSTH shares (Remainco) and Bill announces a decent merger.

  4. We get notified in a similar way for Rights offerings to participate and buy a SPARC share on a 1:1 PSTH basis once an acquisition target has been announced.

Iā€™m not saying this will happen, but itā€™s my preference.

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