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Shares of Pershing Square Tontine Holdings (PSTH) are down 1% to $20.35 in premarket trading after the company announced that its board unanimously determined not to proceed with the Universal Music Group transaction.

Pershing Square has also agreed to assume the Vivendi (VIVHY) indemnity agreement and its UMG transaction costs. "Our decision to seek an alternative initial business combination was driven by issues raised by the SEC with several elements of the proposed transaction - in particular, whether the structure of our IBC qualified under the NYSE rules," Pershing Square Tontine said in a statement. Pershing Square Tontine noted that it has 18 months remaining to close a new transaction "unless extended by the vote of our shareholders."

It added, "Our share price has fallen by 18% since the transaction was announced on June 4th. While we believe our shareholders recognize UMG's extraordinary attributes including its attractive growth characteristics, business quality, and superb management team, we underestimated the reaction that some of our shareholders would have to the transaction's complexity and structure. We also underestimated the transaction's potential impact on investors who are unable to hold foreign securities, who margin their shares, or who own call options on our stock."