Photo courtesy of Hipgnosis Songs Fund
Concord, which operates as Concord Chorus Limited, has proposed an all-cash acquisition of Hypnosis Songs Fund Limited for approximately $1.4 billion. The boards of each company like the arrangement, but it has not yet been agreed upon.
Details of the proposed acquisition were provided to Digital Music News late Wednesday (April 17), and include favorable terms for Hipgnosis shareholders. Concord's offer of more than $1.4 billion represents a 32.2 percent premium over Hypnosis Songs Fund's April 17 closing price and represents a major move by Concord to strengthen its music rights portfolio.
Digital Music News first reported the news following revelations by both sides late Wednesday. Both parties officially announced the news at 2 a.m. ET, and markets reacted immediately in early morning trading on the London Stock Exchange.
Concord, also known as “Bidco” in acquisition documents, has put together a deal that could work. “The respective boards of directors of Bidco and Hipgnosis are pleased to announce that they have reached agreement on the terms of a recommended cash offer under which Bidco will acquire all of Hipgnosis’ issued and hereafter issued share capital (see below). “Acquisition''),'' he announced in a long email.
The Hipgnosis Songs Fund Board of Directors has formally accepted Concord's acquisition offer. The independent committee recommended to the board that the proposal was “fair and reasonable”.
In addition to setting a per-share price, the deal would also include the assumption of a huge amount of debt, effectively pushing the purchase price over $2 billion.
This acquisition certainly aligns with Concord's goal of investing in timeless popular music. However, the deal still requires approval from all stakeholders, as well as regulatory approvals. And there will almost certainly be disagreements between the Hypnosis Songs Fund and its investment advisor, Hypnosis Songs Management, regarding this transaction.
First, Hipgnosis Song Management may think the offer price is too low. The $1.4 billion offer sounds good to devastated shareholders, but it's relatively cheap compared to the impressive IP Hipgnosis controls. More importantly, however, HSM also has a contractual “call option,” which allows it to respond to competing offers, pay the company's market capitalization, or pay the company's market capitalization as determined by an agreed-upon third-party valuation agency. You will be able to pay the amount you paid. As for which option will fetch the highest price.
These are predetermined stipulations that could lead to messy legal conflicts and kill Concord's proposed deal.
Concord is working with Apollo Global Management to help finance the acquisition.
“Concord and its management have followed the development of Hipgnosis since its IPO and believe that Hipgnosis' assets complement Concord's long-standing goal of acquiring high-quality, long-term music assets,” the company shared. .
The more this develops.