Nashville-based independent music company Concord has agreed to buy Britain's Hipgnosis Songs Fund (SONG.L) 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 Merck Mercuriadis and listed in London in 2018, launched a strategic review last year after a shareholder revolt in October led to a board overhaul.
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 have fallen more than 45% from their 2021 peak, rose 31% to 92.5 pence ($1.15) in early trading.
Concord, backed by Apollo (APO.N), is indirectly controlled by Alchemy Copyrights, which acquired music copyright-focused investment firm Round Hill Music Royalty Fund last year under the chairmanship of Robert Naylor.
Naylor joined Hipgnosis as chairman in November after the overhaul and has since focused on attracting potential bidders.
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 has pressured the group.
The deal with Concord, backed by Hipgnosis' board, has to be approved by shareholders.
ORDERLY TERMINATION
In October, shareholders rejected the fund's proposed $440 million deal to sell 29 catalogues to Hipgnosis Songs Capital - a partnership between Blackstone (BX.N) and its investment adviser Hipgnosis Song Management (HSM) - on valuation concerns.
Concord will take over the management of Hipgnosis' assets after the deal completes and following a "short transition" period with HSM, it said.
Naylor said on Thursday said he would encourage HSM and Blackstone to agree an orderly termination of the investment advisory agreement, which has a call option that gives HSM the right to purchase the fund's portfolio if and when the agreement is terminated.
"This (orderly termination) 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," Naylor added.
Mercuriadis, who has managed the likes of Elton John and Beyonce, is the chairman of HSM after stepping as CEO in February.
His representative and Blackstone did not immediately respond to a request for comment.
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)
