Here’s Everything Happening Around Hipgnosis — In 5 Minutes or Less

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The past week has been a dizzying one for Hipgnosis Songs Fund, which now finds itself in the earliest stages of a bidding war, a legal war, or both. Here’s a quick, five-minute catch-up on everything that’s happened over the past few days.

If you’re twenty emails behind and skimming through the Hipgnosis chaos, then this Cliffs Notes update is for you. Here’s the top-level skinny.

Hipgnosis Songs Fund (HSF), a publicly traded entity with an ultra-valuable portfolio of hit music catalogs, has found itself amidst a whirlwind takeover battle. This battle was initiated last week by publishing and music IP heavyweight Concord, who offered $1.4 billion to acquire the fund. The offer, disclosed on April 17th, represented a significant opportunity for battered shareholders to recoup losses and was quickly accepted by the HSF board.

However, the situation quickly escalated when private equity giant Blackstone outbid Concord with a $1.5 billion all-cash offer, highlighting the immense value of the music rights HSF controls. The HSF board has shown clear support for Blackstone’s superior offer, pending formalization.

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If Concord (or another bidder) doesn’t try to beat Blackstone, this would typically mean a smooth path to acquisition. However, the biggest hurdle remains HSF’s complex investment advisory agreement with Hipgnosis Song Management (HSM).

What’s up with Hipgnosis Song Management (HSM)?

HSM, partially owned by music industry figure Merck Mercuriadis and majority owned by Blackstone, holds a controversial clause in its agreement with HSF. This “call option” gives HSM the right to step in and purchase HSF’s entire music catalog under certain circumstances, including a change in investment advisor. HSM has now made it clear they intend to “vigorously protect” this right, adding a serious legal dimension to the takeover battle.

As Yogi Berra observed, “It’s tough to make predictions, especially about the future.” But here are some possible outcomes.

    • Swift Buyout: If HSM backs down, a formal bid from Blackstone could lead to a quick acquisition, satisfying shareholders and providing Blackstone with a lucrative asset.
    • HSM Counteroffer: HSM could exercise its call option, forcing an even higher price for HSF’s assets. This could benefit shareholders but also lead to a protracted negotiation or legal challenge.
    • Concord Counteroffer: Concord could easily up its ante, as could any other well-endowed prospective buyer. Blackstone potentially holds an advantage given its existing Hipgnosis holdings, though the highest bidder is also likely to receive shareholder approval.
    • Stalemate: A protracted legal clash involving HSM could result, potentially scaring off bidders and leaving HSF in operational and financial uncertainty.

And there’s your 5-minute wrap-up. Stay tuned for more developments ahead.

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