The embattled British music royalties investment fund Hipgnosis, which owns the rights to songs by artists from Beyoncé to Neil Young, has agreed to a $1.4bn (£1.1bn) takeover by a music and theatrical rights rival after months of turmoil over the company’s structure and leadership.
The Concord Chorus deal, which offers Hipgnosis shareholders a 32% premium to Thursday’s share price at $1.16 a share, could put an end to uncertainty over the FTSE 250 firm’s future.
The London-listed company, which offers investors the chance to make money from the royalties of tracks by artists such as Shakira, Barry Manilow, Red Hot Chili Peppers and Blondie, had launched a strategic review last year to assess its business options, including a potential sale, after a revolt by shareholders over a planned catalogue sell-off and its business plans.
However, investors responded positively to Concord’s offer, sending shares in the once-high-flying FTSE 250 business up 30% to 92p in early trading.
It marks the latest acquisition for Concord, which successfully bought another rival – Round Hill Royalty Fund – last year. The firm’s website says it owns or administers about 1m copyrighted musical works for artists ranging from Phil Collins and Cyndi Lauper to M.I.A and Leonard Bernstein.
Robert Naylor, the chair of Hipgnosis, said: “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.
“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.”
However, plans to de-list Hipgnosis from the UK stock market are likely to spark further anxiety across the City and Whitehall, where leaders are concerned that London is losing out to rival exchanges abroad and to firms taking UK-listed companies private.
Hipgnosis was founded in 2018 by Merck Mercuriadis, a former manager of acts including Elton John, Iron Maiden, Guns N’ Roses and Beyoncé, who is now an adviser to the business. It went on to spend billions of pounds buying catalogues in an effort to cash in on what it believed were assets undervalued in the streaming era.
That catalogue meant Hipgnosis could earn royalties every time one of the tens of thousands of songs to which it owns the rights was played.
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But its future was thrown into question in October, when shareholders voted against continuing the business as an investment trust. Investors also ousted the Hipgnosis chair, Andrew Sutch, and voted against a $440m sale of the company’s music catalogues to a partnership between its investment adviser and funds advised by Blackstone.
It left the company with no option but to rebuild its board and propose alternative business plans, or face potentially being wound up within six months, leaving the firm with a looming April deadline.
Hipgnosis faced a fresh blow in March, after an independent review cut the value of its music portfolio by 26%. It also suspended shareholder payouts and said it would use any free cash to pay down its debts. The company had already been forced to sell about 20,000 unspecified “non-core” songs for $23.1m in December to try cover its debt payments, marking a 14% discount on their valuation in September.
Commenting on the takeover offer, which will have to be approved by Hipgnosis shareholders, the Concord chief executive, Bob Valentine, said: “We believe we are offering a fair price for Hipgnosis’s catalogues and music assets, giving its shareholders the opportunity to realise their investment at a significant premium to the prevailing share price in cash.”
