After two disastrous months, Hipgnosis Songs Fund (HSF) has agreed to a $1.402 billion takeover by rival Concord Chorus.
In a statement issued early Thursday to the London Stock Exchange, the deal values each Hipgnosis share at £0.93, a premium of about a third to the royalty fund's price at the close of trading on Wednesday.
HSF is in the doghouse following a failed investor continuation decision in October 2023 and a partial catalog sale – essentially a vote of no confidence in both the previous board and investment adviser, Hipgnosis Song Management.
Things took another turn last month when HSF, which has amassed a catalog that includes shares in songs by Neil Young, Justin Bieber, Journey, Lindsey Buckingham, Blondie, Justin Timberlake and many other artists and writers, slashed its value of its portfolio by more than a quarter and told investors it does not plan to resume paying dividends “for the foreseeable future” as it focuses on paying down debt.
The report, written by the board's lead independent adviser, Shot Tower Capital, found that Hipgnosis Song Management, run by Hipgnosis founder and music director Merck Mercuriadis, significantly overstated the fund's revenue and earnings before interest , taxes, depreciation and amortization (EBITDA) and supported catalog acquisitions with financial analysis that failed to meet “music industry standards.”
HSF itself overstated the extent of its music assets, the report notes, in disclosures to investors and regulators. And in an offer last September to investors to sell about 29 catalogs to a sister company Hipgnosis, the fund included a better-than-expected valuation after the deal, according to the report.
Following completion of the acquisition and a short transition period, Concord is expected to take over the management of Hipgnosis' assets, it said in a statement to the London Stock Exchange.
“We are pleased to announce this offer for Hipgnosis, which has been unanimously recommended by the board and has the support of 29.38 percent. of their shareholders,” comments Bob Valentine, CEO of Concord. “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 cash share price.”
from our partners at https://www.billboard.com/business/publishing/hipgnosis-songs-fund-1-4bn-sale-concord-chorus-1235659570/