The music magnate boss of Hipgnosis Songs Management (HSM) is facing allegations that he stole the idea for his company.
A lawsuit was filed against Merck Mercuriadis last year, accusing him of stealing the idea for Hipgnosis from two other music industry tycoons, Aeon Manahan and Afram Gergeo, according to the Sunday Times.
Afram Gergeo was sentenced to nine months of prison in his native Sweden in 2021 for his part in an scam that defrauded a Maltese pension scheme out of nearly €250,000 of savers’ money.
Quantuma, the liquidators of the original Hipgnosis Music Limited say Mercuriadis transferred the business into a separate company of his own, losing investors’ cash in the process.
The firm is suing Hipgnosis for millions of pounds in compensation in London’s High Court. Mercuriadis has denied the claims, vowing to contest them.
Last week Mercuriadis stepped down as boss of HSM amid an increasingly hostile battle with Hipgnosis Songs Fund (HSF), the music royalties fund it acts as investment adviser to.
Mercuriadis will become chairman of the company while chief operating officer Ben Katovsky will become the new chief executive, HSM said on Friday.
HSM, which manages over 150 catalogues with songs by Neil Young, Shakira and Fleetwood Mac, said it has asked the board of HSF to approve the transition of Merck’s role.
It comes as shares in London-listed HSF have fallen 22.5 per cent in the past year. Last month, the fund tabled a “special resolution” to investors in a bid to restore shareholder value.
The company’s recently refreshed board proposed changes to allow Hipgnosis to pay up to £20m to any potential buyer who approaches with a takeover offer.
This deal aims to cover the costs that a potential buyers might incur in investigating and making an offer for the troubled music asset investment firm. It comes as part of a strategic review that the board began in October last year.
Hipgnosis said major shareholders, representing over 35 per cent of shares, support the move. But the fund will have to get the support of the majority of shareholders at an upcoming ‘extraordinary general meeting’, which will take place on Wednesday.