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Blackstone has taken pole position in the takeover battle for Hipgnosis Songs Fund after rival Concord said it would not match the US private equity group’s $1.6bn offer for the UK-listed music rights owner.
Concord, which is backed by Apollo Global Management, said on Thursday it would not increase its offer of $1.25 per share for the group, which falls short of the $1.30-per-share bid from Blackstone last week. The Blackstone offer valued Hipgnosis at almost $1.6bn.
Hipgnosis’s board has already backed Blackstone’s offer and withdrawn its support of the Concord bid. On Thursday, Concord said its offer of $1.25 per Hipgnosis share was final and would not be increased, meaning that the offer will lapse.
The decision by Concord will in effect end the bidding war for Hipgnosis Songs Fund, which was put up for sale by its management after investors voted against continuing the investment fund last year.
Hipgnosis, which owns a large portfolio of music including the Kaiser Chiefs, Red Hot Chili Peppers and Shakira, has helped transform music rights into a mainstream asset class.
After an initial boom in the market, investors grew increasingly wary of the sector when interest rates started to rise. Hipgnosis has since been plagued by questions surrounding the valuation of its portfolio in an era of rising rates, as well as about its complicated governance and management structure.
Blackstone already owns a majority stake in Hipgnosis’s management company, Hipgnosis Song Management (HSM), which collects fees for overseeing the listed Hipgnosis fund.
Hipgnosis now faces a future off the public markets, as part of Blackstone’s wider portfolio. The music rights company owns a portfolio of 138 catalogues with more than 40,000 songs across genres, artists, vintages and right types.
Analysts said shareholders should also be pleased with the outcome of the bidding war, which managed to push up a share price that has traded far below the value of its assets for many months. Even so, the takeover means that London’s stock market will have one fewer company following a spate of bidding wars in recent months.
Winterflood said the board should be applauded for “eliciting a bidding war that has clearly benefited shareholders”.
It added: “As the share price slid in recent years and shareholder discontent became ubiquitous, the key question has long been whether Blackstone was willing to provide the capital to take the portfolio private. This question has now been answered in the affirmative.”
