Hipgnosis faces $1.4bn takeover by Concord Chorus

18th Apr 2024 07:41

(Sharecast News) - Shares in troubled Hipgnosis Songs Fund rocketed by a third on Thursday after the music rights investor said it had agreed a $1.4bn takeover by US-based Concord Chorus, a music and theatrical rights firm, in attempt to end months of infighting over the company's leadership and secure its future.

Hipgnosis Songs investors will get $1.16 a share in cash, a hefty 32% premium from Wednesday's closing price.

Concord is indirectly controlled by Alchemy Copyrights, which acquired music copyright-focused investment firm Round Hill Music Royalty Fund last year for $469m. A successful deal would see it acquire a vast catalogue of songs from artists including Neil Young, Blondie, Shakira, Red Hot Chili Peppers and Carole Bayer Sager.

"The acquisition represents an attractive opportunity for our shareholders to immediately realise their holding at a premium, mitigating the risks we see ahead to achieving a material improvement in the share price," said Hipgnosis chairman Robert Naylor.

"At the same time, the board is confident that Concord, one of the world's leading independent music companies, is the right owner to take on the Hipgnosis catalogue and manage it in the interests of composers and performers."

"We would now encourage Hipgnosis Song Management, the company's investment adviser and Blackstone, which is HSM's majority owner, through funds they manage and/or advise, to agree an orderly termination of the Investment Advisory Agreement."

"This would enable the payment of a larger consideration under the agreed transaction with Concord and bring to an end a period of uncertainty for all Hipgnosis stakeholders," he added, referring to a row between the fund and its advisors over portfolio valuations.

Shareholders In October rejected a proposed $440m deal by the fund to sell 29 catalogues to Hipgnosis Songs Capital - a partnership between Blackstone and the fund's investment adviser Hipgnosis Song Management (HSM).

The dispute led to an overhaul of the board, with Robert Naylor joining as chairman in November.

Hipgnosis was founded in 2018 by Merck Mercuriadis, who managed artists including Elton John and Beyoncé, and became an adviser to the business. A spending spree saw it buying up catalogues to cash in on the popularity of streaming services, but a rise in the value of other asset classes as interest rates soared saw investors move elsewhere.

To make matters worse an independent review in March slashed the value of its music portfolio by 26% and shareholder payouts were suspended. Hipgnosis had already been forced to offload 20,000 unspecified "non-core" songs for $23.1m - a 14% discount - in December to help pay off debt.

Reporting by Frank Prenesti for Sharecast.com