There’s an inevitability about the way that in the music rights-buying boom, it’s not just music catalogues that get acquired – it’s the catalogue acquirers who also get acquired. Try saying that sentence after a couple of gins…
This morning, Round Hill Music and Concord have announced plans for the latter to acquire the Round Hill Music Royalty Fund. That’s Round Hill’s publicly-listed fund that includes 51 catalogues comprising more than 150k songs.
The deal will see Concord pay $1.15 per share in cash, valuing the fund at $468.8m. It’s being pitched as a good deal for shareholders, given that the fund’s current share price is just $0.69.
That’s a sign of some of the challenges which have led to this acquisition, with Round Hill admitting in its announcement that the fund’s “positive financial and operational performance, as well as the continued attractive dynamics of the music rights sector, have not been reflected in the share price”.
Similar dynamics have been challenging rival rights-buyer Hipgnosis in recent times, with its founder Merck Mercuriadis recently expressing his frustration at the fact that for his company too “the current share price does not reflect the success of our investment strategy”.
In its announcement, Round Hill said that its fund’s share price had been “impacted by the inflationary and higher interest rate environment, which has impacted most listed alternative investment companies in the UK”.
Hence its decision to recommend Concord’s cash offer to its shareholders, who will vote on whether to accept it next month (around 18 October). Shareholders with just over 33% of the issued share capital – including Round Hill boss Josh Gruss – have already committed to voting for it, but the company will need approval from 75% for the deal to go through.
If it does, it will be the latest significant deal for Concord, which says it has deployed more than $2bn of capital across more than 100 deals since 2015.
“Concord has a global team of sync, licensing, marketing, copyright and royalty experts well positioned to maximise the value of this portfolio for all of the songwriters and artists within it,” said CEO Bob Valentine in a statement.
“This offer enables RHM shareholders to realise their investment in the business at an attractive premium to the undisturbed share price, while the transaction provides an opportunity to create value for all stakeholders.”
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