Final month, MBW broke the news that there was some fascinating goings-on at Hipgnosis.
As reported, Blackstone-backed Hipgnosis Songs Capital (HSC) launched a bid to amass 29 catalogs from UK-listed Hipgnosis Songs Fund (HSF) for USD $440 million.
These 29 catalogs embody shares in hits carried out by Taylor Swift and Lorde (Joel Little) in addition to by Justin Bieber (Poo Bear), plus shares within the songwriting catalogs of stars equivalent to Shakira, Rick James and Barry Manilow.
The $440 million supply value represented a a number of of 18.3x historic Internet Writer Share (NPS) of the catalogs, and an increase of +26% vs. the worth paid by HSF for his or her unique acquisition.
Sat in the course of this exercise was Hipgnosis Tune Administration (HSM), the funding adviser to each HSC and HSF.
HSM’s CEO – Merck Mercuriadis – defined on the time that he had “consulted with lots of [HSF’s] largest shareholders” forward of the $440 million acquisition bid.
Mercuriadis additional defined that the first advantage of a profitable acquisition from an HSF shareholder’s perspective was that it could “launch money enabling [HSF] to scale back debt and ‘purchase again’ shares out there”, which might then doubtlessly result in a market ‘re-rating’ of HSF’s share value.
(As these of you following this story will know, HSF’s share value is currently trading at round half the dimensions of the worth positioned on it by impartial valuer, Citrin Cooperman. Blackstone’s $440 million bid for the 29 catalogs represents a 17.5% low cost on this portfolio’s value as per this impartial valuation.)
Nevertheless, there was an enormous caveat to HSC’s bid to amass these rights: To make sure that HSC’s supply was aggressive, HSF entered into an impartial ‘go store’ interval, during which it solicited bids from different events to – successfully – see if that $440 million supply may very well be crushed.
In a be aware to shareholders at this time (October 24) , HSF’s board mentioned that “following substantive engagement with quite a few events”, it didn’t obtain a “Superior Provide” as a part of the ‘go store’ course of.
HSF’s board mentioned in a shareholder replace that it had “obtained suggestions by way of the method [from] quite a few the events assessed that they may not justify paying a better value” than the $440 million supply from HSC.
(HSC had a ‘matching proper’ if a superior bid was made, that means that it might have raised its personal bid supply to gazump any rival approaches at a better value.)
In whole, HSF’s board says it was in touch with 17 events in the beginning of the ‘go store’ course of. Eight events then signed NDAs, earlier than one – non-binding – supply was made.
And that was the top of that.
That is one other fascinating chapter within the story of Hipgnosis Songs Fund, which has been a degree of fixation for the monetary pages of UK newspapers prior to now two weeks. (HSF trades on the London Inventory Trade.)
On Thursday (October 26), HSF will maintain shareholder votes on two essential matters:
- Whether or not or to not settle for Blackstone/HSC’s $440 million supply for the 29 catalogs;
- Whether or not or not HSF ought to proceed in its present kind – a choice that might be reached through a ‘continuation vote’ amongst shareholders
Whatever the approach the votes transfer on these two points, Merck Mercuriadis (through HSM) holds an ongoing “call option” to amass the property of Hipgnosis Songs Fund ought to HSF terminate the contract of HSM as its funding adviser.
As MBW reported final week, a “name possibility” is an settlement that sees a possible purchaser (on this case HSM) in a position to acquire assets at a previously-specified price from a possible vendor (on this case HSF).Music Enterprise Worldwide