Listen to our latest Investing Matters Podcast episode 'Uncovering opportunities with investment trusts' with The AIC's Richard Stone here.

Less Ads, More Data, More Tools Register for FREE

Hipgnosis agrees sale to Concord in $1.4 bln music rights deal

Thu, 18th Apr 2024 12:12

Hipgnosis shareholders will get $1.16 per share

*

Deal value represents a premium of about 32%

*

Shares in Hipgnosis jump 31%

April 18 (Reuters) - Nashville-based independent music company Concord has agreed to buy Britain's Hipgnosis Songs Fund for $1.4 billion, the companies said on Thursday, to gain rights to the catalogues of artists including Shakira and Neil Young.

Hipgnosis, a music rights investment company founded by industry veteran and former CEO Merck Mercuriadis, launched a strategic review last year after a shareholder revolt led to a board overhaul, a portfolio revaluation, and a dispute with its investment adviser over a call option.

Its investors will get $1.16 per share in cash, representing a premium of about 32% to Wednesday's closing price, based on current exchange rates. Hipgnosis shares, which listed in London in 2018 and have fallen more than 45% from their 2021 peak, rose 31% to 92.5 pence ($1.15).

Hipgnosis bought several music rights over the years and attracted investors with a steady source of income on royalties from streaming and performances, but faltering valuations amid high interest rates have pressured the group.

Analysts say the focus is now on Hipgnosis' investment adviser HSM, which is backed by Blackstone and holds a call option under an investment advisory agreement that gives it the right to purchase the fund's portfolio if and when the agreement is terminated.

Mercuriadis, who has managed the likes of Elton John and Beyonce, also founded HSM, where he is now chairman.

"The main uncertainty at this stage is whether the investment adviser will trigger the purchase option on the portfolio, and return with the necessary higher offer," Jefferies analyst Matthew Hose wrote in a note.

Hipgnosis Chairman Robert Naylor encouraged HSM and Blackstone to agree an orderly termination of the agreement, saying it would "bring to an end a period of uncertainty for all Hipgnosis stakeholders."

"Mercuriadis has his reputation to protect and is unlikely to let go without a fight," AJ Bell analyst Russ Mould said.

His representative and Blackstone did not immediately respond to a request for comment.

Concord, backed by Apollo, is indirectly controlled by Alchemy Copyrights, which acquired music investor Round Hill Music last year under the chairmanship of Naylor.

Naylor joined as Hipgnosis chairman from Round Hill in November.

The deal with Concord, backed by Hipgnosis' board, has to be approved by shareholders.

In October, shareholders rejected the fund's proposed $440 million deal to sell 29 catalogues to Hipgnosis Songs Capital - a partnership between Blackstone and HSM - on valuation concerns.

Concord's publishing arm counts songwriters such as Daft Punk and Mark Ronson as part of its roster, per its website. ($1 = 0.8021 pounds) (Reporting by Yadarisa Shabong in Bengaluru; Additional reporting by Prerna Bedi, Editing by Sherry Jacob-Phillips, Kirsten Donovan, Christina Fincher and Sharon Singleton)

Related Shares

More News
3 Jun 2024 09:20

Blackstone to increase Hipgnosis offer

(Sharecast News) - US private equity firm Blackstone has upped its bid for embattled music rights publisher Hipgnosis as it looks to change its takeov...

3 Jun 2024 08:56

TOP NEWS: Hipgnosis Songs Fund agrees to raised offer from Blackstone

(Alliance News) - Hipgnosis Songs Fund Ltd has agreed to a slightly improved takeover offer from US private equity firm Blackstone Inc, the two compan...

16 May 2024 16:17

Concord withdraws buy offer for Hipgnosis after outbid by Blackstone

(Alliance News) - Concord Chorus Ltd on Thursday said it terminated its proposed takeover offer for Hipgnosis Songs Fund Ltd, after it was outbid by B...

9 May 2024 15:21

London close: Stocks manage gains as BoE holds rates

(Sharecast News) - London markets closed on a positive note on Thursday, bolstered by the Bank of England's decision to maintain interest rates, in li...

9 May 2024 11:49

TOP NEWS: Blackstone victorious as Concord says Hipgnosis bid is final

(Alliance News) - Concord Chorus Ltd on Thursday said it will not raise its bid for Hipgnosis Songs Fund Ltd, handing victory to Blackstone Inc in its...

Login to your account

Don't have an account? Click here to register.

Quickpicks are a member only feature

Login to your account

Don't have an account? Click here to register.