The board of Hipgnosis Songs Fund has agreed to a US$1.4 billion cash takeover offer from Nashville-based music rights owner Concord.
Concord, which is a record label itself and owns Fantasy Records and Pulse Records, offered US$1.16, equivalent to 93.2p per share.
This is a premium of roughly 32% to yesterday’s closing price of 71p but only a 4.3% premium to Hipgnosis' adjusted net asset value per share as of 30 September 2023 of US$1.11.
In a statement, Concord said the offer “represents an attractive opportunity for shareholders to immediately realise their holding in Hipgnosis in cash”.
Concord also bought the London-listed Round Hill Music Royalty Fund last year for $469 million.
Since the failed continuation vote last October, the statement said the Hipgnosis board has assessed “all options” for the future of the company with the aim of maximising value for shareholders “and considers that in the absence of the acquisition, all alternative options carry significant risks, uncertainties and limitations”.
Robert Naylor, chairman of Hipgnosis, said the board was "pleased to announce and unanimously recommend" the offer.
"The acquisition represents an attractive opportunity for our shareholders to immediately realise their holding at a premium, mitigating the risks we see ahead to achieving a material improvement in the share price."
Naylor said the board was also confident that Concord, as a leading independent music company, is "the right owner to take on the Hipgnosis catalogue", which includes artists ranging from Beyonce and Justin Bieber to Neil Young and Blondie.
He called for the company's investment adviser, Hipgnosis Song Management, and its majority owner Blackstone to agree an orderly termination of their investment advisory Agreement.
"This would enable the payment of a larger consideration under the agreed transaction with Concord and bring to an end a period of uncertainty for all Hipgnosis stakeholders."