Round Hill Music Royalty fund agrees to $470m takeover offer
The trust’s portfolio consists of 51 catalogues comprising over 150,000 songs by artists including Bruno Mars, Celine Dion, Louis Armstrong and The Supremes.
The offer is at $1.15 per share, a 67% premium to the $0.69 closing price on 7 September and an 11.5% discount to the economic NAV per share of $1.30 as at 8 September.
Under the terms of the deal, which has received the board's unanimous support, Concord will acquire the entire issued share capital of RHM. The bid requires approval from 75% of shareholders, but already has irrevocable undertakings from 33.1% of share capital, including Round Hill CEO Josh Gruss.
«The board is pleased to present this opportunity for liquidity at a premium to both the share price and the IPO price, as well as at a narrow discount to economic net asset value per share. The recommended offer represents excellent value for shareholders,» said Robert Naylor, chairman of RHM.
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According to the Association of Investment Companies, the £516m investment trust, which launched in November 2020, is currently trading at a 45.7% discount to net asset value.
In a research note, Jefferies analysts Matthew Hose and Fiona Huang said the deal was «highly likely to be successful» due to the trust's large discount and sub-scale size.
Meanwhile, Peel Hunt analyst Anthony Leatham said it was unsurprising to see more bid activity, given that investor sentiment towards less frequent, relatively opaque NAVs, can be «hesitant» and result in wide discounts.
Winterflood also described the takeover bid as no surprise, noting there has been a wider trend in the closed-ended space, most notably in property, where discounts and low
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