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Blackstone has made a “best and final” offer for Hipgnosis Songs Fund as it seeks to forestall any attempt to agitate for a higher price by hedge funds that have built a large stake in the UK-listed music rights owner.
A group of US and UK hedge funds have acquired a potential blocking stake in Hipgnosis ahead of a crucial shareholder vote on Blackstone’s $1.6bn offer.
A Financial Times analysis of the company’s shareholder base shows well over a quarter of the shares are held by hedge funds that trade on the stock movements of takeover targets, leaving them with more than enough to vote down the deal next month.
Blackstone will need 75 per cent of voting shares at a meeting to be held in July to approve the deal.
Hedge funds that own shares in the company include TIG, now its largest investor having raised its stake over the past three months to 14 per cent. Others include Glazer Capital, which owns about 8 per cent, Kryger Capital, which holds 6.6 per cent and Sand Grove Capital Management, which owns more than 6 per cent.
One person familiar with the thinking of some of the hedge funds said they wanted Blackstone to consider a higher price to secure their votes — a practice known as “greenmailing”.
However, the US private equity group on Tuesday said it had made a best and final offer.
While this does not raise the value of the deal, it prevents Blackstone from increasing its offer or making a new one — signalling to the hedge funds that any attempt to block the takeover could simply bring about the deal’s collapse.
Blackstone this month raised its offer price as it restructured the bid to make completing the deal easier.
The US private equity group switched its offer to a so-called scheme of arrangement, which raised the acceptance level to 75 per cent. As part of the move, Blackstone agreed to a modest increase in its offer from $1.30 a share to $1.31.
The original structure of the deal — a normal takeover offer — would only have required 50 per cent of shareholders to accept.
A scheme of arrangement has an advantage for Blackstone because it would prevent a minority of Hipgnosis investors from remaining owners of the shares.
