Reservoir Receives New Takeover Proposal Following Irenic Bid

Photo Credit: Reservoir Media

Let the takeover battle begin: About one week after Irenic Capital Management swooped in with an attempt to take Reservoir Media (NASDAQ: RSVR) private, different shareholders have submitted a competing bid.

Word of the latter surfaced in SEC filings this afternoon, following Irenic’s official move to purchase Reservoir. As some will recall from our prior coverage, Irenic has for years been voicing support for the publisher’s management – while also describing RSVR as “substantially undervalued.”

Evidently, the time is now for the activist investor to act on these longstanding concerns; the New York City-headquartered firm floated an offer of $10 to $11 per share for Reservoir. (RSVR spiked immediately after the bid emerged and rose another 8.3% today to finish at $9.75; the price represents a decidedly healthy 30% hike on the year.)

Enter fellow shareholders Richmond Hill Investment Co. and Wesbild, the latter a subsidiary of Persis Holdings. Persis was founded by Reservoir head Golnar Khosrowshahi’s father and is in its own words a holding company.

As confirmed by Reservoir, building on their own sizable RSVR holdings, Richmond Hill and Wesbild are looking to spend $10.50 a pop on “all of the outstanding shares of common stock” that they don’t already own.

Golnar Khosrowshahi’s presumed preference for the offer from her family’s holding company is a given. But it doesn’t appear we’ll receive an update from her, or at least Reservoir itself, anytime soon.

That’s because the business’s board has established a special committee of “independent and disinterested” investors to evaluate the proposals as well as “any other alternatives.”

“Reservoir does not intend to comment further or disclose any developments regarding the proposal unless and until it deems further disclosure is appropriate or required,” the song-rights investor indicated.

In other words, we’ll have to keep an eye out for news from Irenic (is an increased offer forthcoming?) and the committee (a separate bidder yet would definitely require “further disclosure”) in this latest battle for control of a publicly traded music company.

On the “latest” front: Many will remember Warner Music’s eventually abandoned exploration of a deal for Believe (which exited the Euronext Paris in any event) and the dramatic conclusion to Hipgnosis Songs Fund’s run on the London Stock Exchange.

Of course, there are unique elements to the Reservoir showdown – one being the windfall available to Irenic should it ultimately drop the takeover attempt. The space between the offers is noteworthy as well; at the top level, the opposite side’s $10.50 per share bid will presumably push Irenic towards the high end of its own offer.

Then there’s the bigger-picture significance of the catalog craze. Wherever the cards fall when it comes to Reservoir’s considerable song-rights portfolio, the episode’s a good reminder that plenty of music IP is set to rechange hands in the coming years – an unsettling reality especially in light of AI’s continued rise.