Hipgnosis agrees £1.1 billion takeover from rival amid uncertain future
Music investment fund, Hipgnosis, has agreed a takeover worth £1.1bn with a rival musical ownership rights company.
Hipgnosis was formed in 2018 by Chic’s Nile Rodgers and music manager Mick Mercuriadis. The future of the company has looked uncertain for some time, however, this new arrangement with Concord Chorus could put an end to the speculation surrounding Hipgnosis.
The business, registered on London’s FTSE 250, published a review in March which estimates the value of its assets to be between £1.8 billion and £2.06 billion. This filing, carried out by advisor Shot Tower, represents a decrease in the company’s portfolio of 26% compared with the last quarter, which had a negative impact on its share price.
Hipgnosis had already put measures in place ahead of the March filing, in anticipation of the fallen price of shares. In January, they announced plans to suspend dividend payments until the end of the financial year, which they recently revealed would remain active “for the foreseeable future”.
In September, share prices were at 137p, but now they have since dramatically decreased. As part of the deal with Concord Chorus, shareholders will receive a 32% premium on top of the current price, which works out to be 93p.
Due to a rise in interest rates, Hipgnosis has faced an increase in its debt level, which has led to the company reducing the value of its portfolio, which also raised question marks around the governance of Mercuriadis.
The potential purchase of Hipgnosis by Concord Chorus comes after the company previously acquired Round Hill Royalty Fund last year. According to the Financial Times, the investment group is funding the move thanks to United States-based private equity firm Apollo.
Chair of Hipgnosis, Robert Naylor, said of the deal: “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.”
Naylor continued: “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.”
Meanwhile, Bob Valentine, chief executive of Concord, stated: “We believe we can integrate Hipgnosis’ catalogues into our wider portfolio of 1.2mn songs in a way that will deliver benefits for composers, performers and all our stakeholders.”
Notably, in 2021, Neil Young agreed a £150million deal with Hipgnosis Songs Fund. As part of the agreement, the Canadian singer-songwriter relinquished the rights to 1,180 songs, which equates to half of his entire back catalogue. They also own music by the Red Hot Chili Peppers, Shakira and Blondie, among others.
This is a developing story.
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