Hipgnosis Songs Fund has found itself at the centre of a bidding battle after Apollo-backed US investment group Concord topped a rival offer from Blackstone by raising its own approach to $1.5bn.
Blackstone over the weekend made a proposal to the company’s board to acquire the music rights group for $1.24 per share in cash to try to derail the recommended offer from Concord.
On Wednesday Concord said it would increase its bid to just over Blackstone’s, and offer $1.25 for each share for Hipgnosis Songs Fund (HSF). Concord said it “remains committed to becoming the new owner of Hipgnosis”.
The offer has again been recommended by the Hipgnosis board, which said it was “in the best interests of Hipgnosis shareholders as a whole”.
Hipgnosis was founded by music executive Merck Mercuriadis in 2018 to turn music rights into a mainstream asset class. It owns a large portfolio of music that includes the Red Hot Chili Peppers and Shakira.
Shareholders last year voted against the continuance of the company, sparking a strategic review by a new board and ultimately a sale process.
Concord’s offer on Wednesday will again throw the future of the music rights company into question, with those close to Blackstone saying the private equity group was considering its options. Blackstone has made repeated, but lower, offers for the company.
Blackstone also part owns Hipgnosis Song Management (HSM), the manager of Hipgnosis Songs Fund.
When making its offer, Blackstone also warned its investment adviser had an option, exercisable at any point in time during the six-month period following the termination of its contract, to purchase the entire portfolio of songs.
Both Blackstone and HSM have said they will defend this right legally, effectively warning against any attempt to rip up the management contract. It is not clear how Concord will seek to deal with the existing management agreement.
Concord has now secured backing from investors holding 31 per cent of the issued share capital of Hipgnosis. Concord also said it intended to sell up to 30 per cent of Hipgnosis’ assets within a period of 18 to 24 months following completion of the acquisition.
Concord, which is controlled by investor Alchemy Copyrights and is ultimately majority owned by US pension fund Michigan Retirement, has been an acquirer of music rights and companies.
Concord will provide the majority of the equity financing, with a minority of equity as well as debt from asset manager Apollo.
The raised Concord offer represents an increase of about 7.8 per cent on its original offer, or 42.6 per cent to the closing price of 71p a share on the last day prior to the bid.
