Founded in 2018, Hipgnosis Songs Fund helped to drive up the prices of music catalogs. The company acquired the catalogs of legacy artists like Neil Young, Bob Dylan, Bruce Springsteen, and more. The company reportedly paid $100 million for half of Young’s catalog and paid roughly five times as much to both Dylan and Springsteen. However, overspending and questionable management of assets led to the fund being overextended. Now, Nashville-based Concord is buying them out in a billion-dollar deal.
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According to Music Business Worldwide, the board at Hipgnosis notified shareholders this morning that Concord made a cash offer for $1.4 billion to acquire its catalogs. The board has accepted the offer, saying that it comes at a premium of 32.2 percent of its closing sale price. They’ve urged the fund’s shareholders to follow suit.
[RELATED: Justin Timberlake Sells Entire Music Catalog to Hipgnosis]
Hipgnosis Songs Fund’s CEO Rob Naylor and the board plan to rubber-stamp the deal with Concord during a general meeting and a court meeting on June 10. They’ll finalize the sale sometime in quarter three.
However, Hipgnosis Songs Management, HSF’s investment adviser may throw a wrench in the works. The sale to Concord hinges on HSM taking a $25 million payment to walk away from HSF. This may not happen. HSM holds a “call option” that decrees that if HSF fires HSM as its investment adviser, a clause is triggered that allows HSM to acquire HSF for a pre-set sum.
That pre-set sum would be the higher of three options—HSF’s public market cap, its fair value, or the price a separate entity is willing to pay to acquire HSF. The latter would mean that HSM could match Concord’s offer and take over HSM.
Hipgnosis Songs Fund Is Ready to Sell to Concord
Naylor spoke about the deal in a statement. “The Board is pleased to announce and unanimously recommend this US$1.4 billion offer for Hipgnosis from Concord. The acquisition represents an attractive opportunity for our shareholders to immediately realize their holding at a premium, mitigating the risks we see ahead to achieving a material improvement in the share price,” he shared.
Concord CEO Bob Valentine also made a statement on the offer. “We are pleased to be announcing this offer for Hipgnosis, which has been unanimously recommended by its Board and has the support of 29.38 percent of their shareholders,” he shared. “We believe we are offering a fair price for Hipgnosis’ catalogs and music assets, giving its shareholders the opportunity to realize their investment at a significant premium to the prevailing share price in cash,” Valentine added. Then, he said, “We believe we can integrate Hipgnosis’ catalogs into our wider portfolio of 1.2 million songs in a way that will deliver benefits for composers, performers, and all our shareholders.”
Featured Image by Michael Kovac/WireImage
