Hipgnosis Songs Fund, the London company that bought up the rights to the music catalogs of nearly 150 artists from Justin Bieber to Neil Young, is selling itself to Concord for $1.4 billion.
Nashville, Tennessee-based Concord, which is backed in this deal by private equity company Apollo Global Management, offered Hipgnosis investors $1.16 per share in cash, the company said in a regulatory filing. That’s a 32% bump from the stock’s Wednesday closing price in London.
Hipgnosis’ board unanimously agreed to the deal, which comes after turmoil at the company founded in 2018 in London by Merck Mercuriadis, who once managed stars like Elton John and Beyonce. While it spent nearly $3 billion buying the catalogs rights of stars like Justin Timberlake, Shakira and The Red Hot Chili Peppers, it was never able to convert the investments into solid returns for its investors.
The deal is backed by a number of top shareholders, representing about 29 per cent of Hipgnosis’ issued share capital, The Financial Times reported.
But Reuters noted the sale hinges on approval from Mercuriadis, who leads Hipgnosis Song Management, the company’s investment adviser, which holds an option that gives it the right to purchase the fund’s portfolio.
“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 to investors, Reuters reported.
The company launched a strategic review last year, Bloomberg reported, which led to the valuation of its 65,000+ song portfolio getting slashed by more than a quarter. Another cut came after Hipgnosis revealed an accounting error in March, weighing on the company’s London-traded stock.
The Hipgnosis board is still seeking to terminate its agreement with Mercuriadis, who continues to run Hipgnosis Song Management, the company’s Blackstone-owned investment adviser, The FT reported.
Concord, whose legal name is Alchemy Copyrights, already owns the catalog rights to a range of acts including Creedance Clearwater Revival and Iggy Pop.
It also operates several music labels, including Concord/Rounder, Concord Jazz, Fantasy Records, Fearless Records, and KIDZ BOP and has a music publishing division, a theatrical division that includes “Phantom of the Opera” and “Cats” composer Andrew Llloyd Weber’s catalog among others and a content division.
Apollo is providing financing in the form of debt, and will hold a minority, indirect stake in Concord, according to Bloomberg.