After a disastrous couple months, Hipgnosis Songs Fund (HSF) has agreed to a $1.402 billion takeover from rival Harmony Refrain.
In an announcement issued early Thursday to the London Inventory Alternate, the deal values every Hipgnosis share at £0.93, a premium of roughly one third the royalty fund’s value on the shut of buying and selling on Wednesday.
HSF has been within the doghouse since a failed buyers continuation decision in October 2023, and a partial catalog sale — successfully a vote of no confidence in each the earlier board and the funding advisor, Hipgnosis Track Administration.
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Issues took one other flip final month when HSF, which has amassed a catalog that features stakes in songs by Neil Younger, Justin Bieber, Journey, Lindsey Buckingham, Blondie, Justin Timberlake and lots of different artists and writers, lower the worth of its portfolio by greater than 1 / 4 and informed buyers that it doesn’t intend to recommence paying dividends “for the foreseeable future” because it focuses on paying down money owed.
Compiled by the board’s lead unbiased adviser, Shot Tower Capital, the report discovered that Hipgnosis Track Administration, run by Hipgnosis founder and music supervisor Merck Mercuriadis, materially overstated the fund’s income and earnings earlier than curiosity, taxes, depreciation and amortization (EBITDA) and supported catalog acquisitions with monetary evaluation that failed to fulfill “music trade requirements.”
HSF itself overstated the scope of its music property, the report famous, in disclosures to buyers and regulators. And in a pitch final September to buyers to promote some 29 catalogs to a sister Hipgnosis firm, the fund included a better-than-could-be-expected post-deal valuation, the report discovered.
Following completion of the acquisition and a brief transition interval, reads an announcement to the London Inventory Alternate, it’s anticipated that Harmony will take over the administration of Hipgnosis’ property, including to a enterprise that, since 2015, has accomplished greater than 100 transactions throughout recorded music, music publishing and theatricals, US$2.8 billion spending spree.
“We’re happy to be asserting this provide for Hipgnosis, which has been unanimously really helpful by its board and has the help of 29.38 per cent. of their shareholders,” feedback Bob Valentine, CEO of Harmony. “We imagine we’re providing a good value for Hipgnosis’ catalogues and music property, giving its shareholders the chance to understand their funding at a big premium to the prevailing share value in money.”
Harmony’s management identifies Hipgnosis’ property as additional means to develop its enterprise and scale and leverage its operations.
