In its much-anticipated announcement of what a new valuer thinks its catalogue of songs from acts such as Christine McVie, Beyoncé, Blondie, Red Hot Chili Peppers and Shakira might really be worth.
The fund, which owns the back catalogues for artists including Justin Bieber and Shakira, launched a strategic review last year to assess a potential sale and other options.
On Thursday, Hipgnosis confirmed that Alchemy Copyrights, trading as Concord, had struck the takeover deal to buy the business for the equivalent of 93.2p per share.
Alchemy purchased fellow UK-based royalties fund Round Hill Music last year in a £376 million move.
The deal, which will happen through a court-approved arrangement, has received the support of the company board and will need backing from investors.
He added: “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.
“At the same time, the board is confident that Concord, one of the world’s leading independent music companies, is the right owner to take on the Hipgnosis catalogue and manage it in the interests of composers and performers.”
First, the new asset figure is a cut of 26% from the last estimate six months ago from the previous valuer. Different methodologies produce different outcomes, but $2.6bn-ish to $1.9bn-ish is a big drop. Second, Hipgnosis added that the valuation doesn’t include tax charges that could apply if the assets were sold at the new level. Third, the board said the lower figure means no dividends “for the foreseeable future”, a humiliating position for a fund established to turn royalty payments from a broad portfolio of songs into a reliable income stream for investors.
In May 2021, Hipgnosis acquired the song catalogue of the Red Hot Chili Peppers (for its publishing business MoeBeToBlame Music) for a reported $140-$150 million. Hipgnosis also acquired the catalogue of songwriter Andrew Watt. In August 2021, Hipgnosis acquired the catalogue of Fleetwood Mac member Christine McVie. On 10 August 2020, Hipgnosis acquired 100% of Chris Cornell's catalog of song rights (241 songs), including his band Soundgarden's catalog. Hipgnosis' annual report was published in July 2021, valuing the catalogue at $2.2 billion.
