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On 18 April 2024 the board of Hipgnosis Songs Fund (SONG) announced that had it reached an agreement on the terms of a recommended cash offer for the entire issued share capital of SONG.
The recommended offer can be summarised thus:
SONG shareholders will receive US$1.16 in cash (the "Cash Consideration"). This values SONG at US$1,402.7 million. Based on the exchange rate at the time of the announcement, the sterling equivalent is £0.932 per share.
Further, if the board and investment advisor, HSM, together with the bidding entity, can reach an agreement to terminate the management agreement, it is possible shareholders could receive up to a further US$25m which would otherwise be paid to the investment advisor under the terms of the existing agreement. The maximum amount a shareholder might receive from such an agreement is US$0.020 per share.
The cash consideration represents a premium of approximately:
- 32.2% per cent. to the Closing Price of £0.71 on 17 April 2024
- 36.5%. to the six-month volume weighted average price per Hipgnosis Share of £0.68 to 17 April 2024; and
- 4.3% per cent. to SONG's adjusted 30 September 2023 Operative NAV of US$1.11.
The bidding entity is backed by Concord, a full-service music and theatrical rights company with an extensive new release artist and writer programme. Concord's global team provides artists, songwriters, playwrights and composers with creative and administrative support in sync, licensing, marketing, promotion and A&R. Concord and its management have followed the progression of Hipgnosis since IPO and believe that Hipgnosis' assets complement Concord's long-standing objective to acquire high quality and long-term music assets. Concord believes that the quality of SONG's assets are consistent with Concord's existing holdings, and creators connected to the rights acquired will benefit from the services of Concord's existing creative and administrative support teams globally.
Shareholders will receive a scheme document outlining the next steps including the timetable for the implementation of the scheme within 28 days of the announcement, but it is expected that the scheme, subject to 75% shareholder approval, will be completed during Q3 2023.
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