Airbnb Snubs Billionaire Bill Ackman's Offer To Go Public Via SPAC Merger: Report

Airbnb Inc. brushed off a merger with Pershing Square Tontine (NYSE: PSTH-U), the blank-check company owned by billionaire investor Bill Ackman, Bloomberg reported Wednesday.

What Happened: No discussions are taking place between the two companies and early stage talks came to a halt after Airbnb filed confidentially for an initial public offering last month, people familiar with the matter told Bloomberg.

The home rental firm prefers a traditional IPO but has not completely ruled out a merger with Ackman’s special purpose acquisition company, the unnamed sources revealed.

The SPAC has $5 billion in capital including a $1 billion in capital committed by the billionaire’s Pershing Square Capital Management, LP, Ackman said in a letter to investors, as reported by Bloomberg.

Ackman reportedly listed three U.S. IPOs in the last ten years worth $5 billion or more — Alibaba Group Holding Ltd BABA, Uber Technologies Inc UBER, and Facebook Inc FB — and commented in his letter that a sale of that magnitude is difficult. 

“Uncertainty is the enemy of the IPO and the friend of a $5 billion SPAC with the largest amount of committed capital,” he said, alluding to the large size of the vehicle.

Why It Matters: Airbnb’s listing has been long-anticipated and till earlier last month there was no clarity on what route the firm would take to go public.

In August, the vacation home rental firm finally filed a draft registration statement with the Securities and Exchange Commission proposing an IPO.

Morgan Stanley MS and Goldman Sachs Group Inc GS are said to be the potential underwriters for the listing, according to the Wall Street Journal.

The company’s losses piled up in the second quarter as revenues declined to $335 million, a drop of 67% from $1 billion in the same period last year.

The COVID-19 pandemic has severely impacted the travel sector since March and caused Airbnb’s bookings to fall 90%, according to Bloomberg's sources.

Price Action: Pershing shares closed about 1.8% higher at $21.87 on Wednesday.

Photo courtesy: Fabien Maurin on Unsplash