Bill Ackman's Ambition Soars: New Investment Vehicle Targets Musk's X

X, formerly Twitter, has been one of the most controversial companies since its takeover by billionaire polymath and Tesla Inc. TSLA CEO Elon Musk for $44 billion last October. 

The company's revenue has declined substantially since Musk incorporated radical changes regarding data sharing and censoring on X, adversely impacting user engagement significantly. 

While the company's poor performance has allowed competitive platforms such as Meta Platform Inc.'s Threads to take off, billionaire hedge fund investor Bill Ackman proclaimed his desire to take X public once again to restore the microblogging platform's former market dominance. 

Don't Miss:

• Until 2016 it was illegal for retail investors to invest in high-growth startups. Thanks to changes in federal law, this Kevin O’Leary-Backed Startup Lets You Become A Venture Capitalist With $100.
• It's only a matter of time before Autonomous Security Robots (ASRs) are on patrol near you. This industry leading company is offering up to $10M of bonds with 10% annual interest paid in cash.

Ackman's New Investment Vehicle

Ackman, founder and CEO of Pershing Square Holdings Ltd., has been one of the most successful hedge fund managers on Wall Street, with a net worth of approximately $3.6 billion. Ackman's most noteworthy investment recently was on credit hedges in March 2020, which allowed him to generate over $2.6 billion in profits.

Ackman recently got approval from the U.S. Securities and Exchange Commission (SEC) for a special purpose acquisition rights company (SPARC), designed as a shell company to merge with a mature unicorn. 

In a conventional SPAC setup, a sponsor raises funds by launching an initial public offering (IPO) for a shell company, committing to acquire a thriving private firm. The Pershing Square SPARC Holdings Ltd. differs from traditional SPACs because the former provides investors with information about the company it plans to acquire, allowing them to make informed decisions. 

The SPARC vehicle is required to acquire a company with a net valuation of at least $1.5 billion, with Pershing Square holding a maximum equity stake of 4.95% as the anchoring investor. In addition, as anchor investors in the potential deal, Ackman is required to commit a minimum of $250 million and a maximum of $3.5 billion. 

Trending: Join the ranks of investors like Bill Gates and Mark Cuban by tapping into early-stage startups. Get the inside scoop on this innovative startup here.

Ackman's Interest In X 

Following the approval of Pershing Square SPARC Holdings nearly two years after filing, Ackman has been hunting for a suitable company to merge with. 

"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," Ackman posted on X. "We promise a quick yes or no."

Ackman, who is an avid X user, expressed his keenness in striking a deal with Musk's X to facilitate the public offering of a portion of the social media platform through his newly approved special purpose acquisition rights firm. 

"The answer is absolutely because I like the business, I like Musk and I think it's important," Ackman stated.

Ackman believes that X's substantial debt burden, approximately $13 billion, could be a compelling incentive for Musk to consider the proposed deal and reintroduce a portion of X to the public market.

In contrast to an IPO, the SPARC could ensure a predetermined minimum capital amount, potentially affording Musk the opportunity to raise sufficient funds to reduce the substantial $13 billion debt burden, thanks to its adaptable structure.

X's Uncertain Future

Despite Ackman's inclination, the likelihood of Pershing Square successfully finalizing a deal with Musk remains uncertain. Musk, who invested $44 billion to privatize X, had expressed his intention to take the company public again in a few years. 

Should a portion of X return to the public market, its valuation would probably be considerably lower than the $44 billion Musk initially invested. Additionally, the company's substantial debt is expected to be an unattractive factor for prospective public investors.

"Taking X public would expose X to financial and governance regulatory transparency and accountability, which is why I'm skeptical it'll happen," Alan Jagolinzer, a professor of financial accounting at the University of Cambridge Judge Business School, posted on the platform.

See more on startup investing from Benzinga:

• Many NBA players, including LeBron James, have ventured into fine wine investments as an alternative asset. Now you can too with just $25.
• Join the ranks of investors like Bill Gates and Mark Cuban by tapping into early-stage startups. Get the inside scoop on this innovative startup here.