Hipgnosis Songs Fund, the British company which spearheaded the music industry’s frenzy for catalog deals, acquiring thousands of songs by artists like Justin Bieber, Neil Young, 50 Cent and Shakira, is on the verge of being acquired by Concord, an independent music company, for $1.4 billion.
The tentative deal, approved unanimously by Hipgnosis’s board and announced on Thursday, faces a potential obstacle: a contractual option held by an affiliated company to purchase the catalog at a predetermined price.
Robert Naylor, Hipgnosis’s chairman, stated, “The acquisition offers an appealing opportunity for our shareholders to realize their holdings at a premium, mitigating potential risks and aiming for a significant improvement in the share price.”
Concord’s CEO, Bob Valentine, expressed confidence in integrating Hipgnosis’s catalogs into their extensive portfolio of 1.2 million songs, foreseeing benefits for composers, performers, and stakeholders alike.
Concord’s cash offer of $1.16 per share represents a 32 percent premium over Hipgnosis’s recent closing share price, although it remains down nearly 28 percent from its peak in November 2021.
If completed, the Concord acquisition would mark the conclusion of one of the music industry’s most tumultuous tales. Founded by Merck Mercuriadis, a veteran music executive, who managed Beyoncé, Guns N’ Roses and Elton John, Hipgnosis went public in 2018, advocating that royalties from popular song copyrights could surpass the value of gold or oil.
Despite initial success, with acquisitions totaling about $2.2 billion, Hipgnosis faced challenges as interest rates rose. A strategic review in March highlighted overvaluation of assets and questioned business practices, leading to the agreement with Concord.
In 2022 private quiet companies rushed to buy music assets and Blackstone bought a majority stake in Hipgnosis Song Management, which advises Hipgnosis Songs Fund.
Blackstone also has a separate $1bn fund, Hipgnosis Songs Capital, which is privately held and advised by HSM.
Hipgnosis is a rights holder for over 20 of the top 100 most streamed songs in the Spotify ‘billions club’ which are songs surpassing 1bn streams by 2024.
Hipgnosis intends to encourage its investment adviser to terminate the call option, enabling the acquisition to proceed smoothly.
