Concord Floats $1.4 Billion All-Cash Offer to Acquire Hipgnosis Songs Fund — Let’s See If This Goes Through

Hipgnosis songs fund
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Hipgnosis songs fund
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Photo Credit: Hipgnosis Songs Fund

Concord, operating as ‘Concord Chorus Limited,’ has proposed an all-cash takeover of Hipgnosis Songs Fund Limited for roughly $1.4 billion. The respective company boards love the arrangement — though this is hardly a done deal.

Details of the offer were tipped to Digital Music News late Wednesday (April 17th), with terms that could spell a convenient out for Hipgnosis shareholders. Concord’s offer, which tops $1.4 billion, represents a 32.2 percent premium on the April 17th closing price of Hipgnosis Songs Fund and signifies a major move by Concord to enhance its music rights portfolio.

Digital Music News was first to report the news following a late-Wednesday disclosure by both sides. The parties officially disclosed the offer at 2 am ET with the news, and markets immediately reacted in early morning trading on the London Stock Exchange.

Concord, also referred to as ‘Bidco’ in the acquisition paperwork, hammered out an agreement that might just work. “The board of directors of each of Bidco and Hipgnosis are pleased to announce that they have reached agreement on the terms of a recommended cash offer pursuant to which Bidco will acquire the entire issued and to be issued share capital of Hipgnosis (the “Acquisition”),” the lengthy email declared.

The Hipgnosis Songs Fund board has formally accepted Concord’s acquisition offer. An independent committee advised the board that this offer was ‘fair and reasonable.’

Beyond the per-share pricing, the deal would also involve the assumption of a sizable tranche of debt that would effectively push the acquisition price past $2 billion.

This acquisition certainly aligns with Concord’s goal of investing in enduringly popular music. But the deal is still subject to the approval of all stakeholders and even regulators. And there’s almost certainly going to be disagreement between Hipgnosis Songs Fund and its investment advisor, Hipgnosis Song Management, about the deal.

For starters, it’s likely that Hipgnosis Song Management believes that the offer price is too low. While the $1.4 billion offer sounds good to battered shareholders, it’s relatively cheap compared to the impressive IP Hipgnosis controls. But more to the point, HSM also has a contractually-determined ‘call option’ that gives it the ability to match a competitive offer, pay the company’s market cap, or pay an amount determined by an agreed-upon third-party appraiser — depending on which option fetches the highest price.

Those are the pre-determined stipulations, which may also invite a messy legal confrontation and scuttle Concord’s deal offer.

Concord is working with Apollo Global Management to help finance the acquisition.

“Concord and its management have followed the progression of Hipgnosis since IPO and believe that Hipgnosis’ assets complement Concord’s long-standing objective to acquire high quality and long-term music assets,” the company shared.

More as this develops.