Bill Ackman, the billionaire investor, has proposed a groundbreaking method to take SpaceX (SPACE) public through a merger with Pershing Square SPARC Holdings.
Ackman’s plan involves distributing Special Purpose Acquisition Rights (SPARs) to Tesla (TSLA) shareholders, enabling them to invest in a SpaceX IPO. Shareholders who opt out can sell their SPARs to other interested investors.
"This would reward loyal Tesla shareholders with the opportunity to invest in SpaceX, or receive cash for their SPARs, while completely democratizing the IPO process," Ackman stated in his social media pitch to Elon Musk.
Key Deal Features
- No underwriting fees or dilutive securities
- No founder stock or shareholder warrants
- Pershing Square would forgo its right to SPARC sponsor warrants
- SpaceX would go public with a 100% common stock capital structure
- Transaction costs limited to modest legal fees, covered by SPARC
Pershing Square has pledged to invest $4 billion at a fixed share price, irrespective of market fluctuations.
The Numbers
Under Ackman’s proposal, around 0.5 SPARs would be issued for each Tesla share, resulting in 1.723 billion SPARs outstanding (including 61.1 million SPARs already in circulation). Each SPAR could be converted into two SpaceX shares, totaling 3.446 billion SpaceX shares.
The potential capital raise is significant:
- At an exercise price of $11.03 per SPAR, SpaceX would raise $42 billion
- At an exercise price of $42 per SPAR, SpaceX would raise $148.7 billion
Timeline and Future Prospects
Ackman suggested that due diligence and a definitive agreement could be concluded within 45 days, with an announcement possible by mid-February. The structure allows for flexibility between primary and secondary shares.
Ackman also hinted at additional incentives: SPAR holders who exercise their rights would receive Pershing Square SPARC Holdings II SPARs, potentially usable to take Elon Musk’s AI company, xAI, public in the future.
"It only seems fitting that the world’s most innovative and efficient rocket company should go public in the most innovative, efficient, and equitable manner for Tesla shareholders," Ackman concluded. "To Mars and beyond!"