Hipgnosis: Shakira’s hips (and hits) can’t shift the dial

Embattled music fund Hipgnosis has failed to find a higher bid than Blackstone’s $440m (£358m) offer for its catalogue sale, which includes songs by Shakira and the Kaiser Chiefs, as it continues to recommend shareholders vote in favour of a continuation for the company this week.

Shares in the songs fund dropped two per cent today after it said that it attracted 17 buyers in its ‘go-shop’ process, with eight signing non-disclosure agreements and one submitting a non-binding offer, which ultimately fell through.

Multiple parties told the board that they “could not justify paying a higher price” than the offer from the original buyer for the first disposal.

Hipgnosis incorporated a ‘go-shop’ provision to allow the board to seek and entertain alternative offers for a period of 40 days from the announcement of the sale of 29 music catalogues.

The landmark deal for a music rights company aims to re-rate the company’s share price, which investors had previously expressed frustration with, believing it didn’t reflect the company’s value

The sale, made to Hipgnosis Songs Capital, a partnership between Hipgnosis Song Management and investment manager Blackstone, will see a total return of 44 per cent over a three-year weighted average ownership period.

To further bolster their financial position, Hipgnosis plans to use the proceeds of the sale to initiate a share buyback program of up to $180m and repay $250m of debt.

Shareholders are still recommended by the board to vote in favour of the continuation resolution this Thursday at the annual general meeting and the first disposal resolution at the extraordinary general meeting.