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The Hipgnosis Songs Fund is at the center of a bidding war after Apollo-backed US investment group Concord topped a rival offer from Blackstone by increasing its own approach to $1.5 billion.
Blackstone made a proposal to the company’s board over the weekend to acquire the music rights group for $1.24 per share in cash, seeking to thwart Concord’s recommended offer.
On Wednesday, Concord said it would increase its offer to slightly higher than Blackstone’s, offering $1.25 for each share of Hipgnosis Songs Fund (HSF). Concord said it “remains committed to becoming the new owner of Hipgnosis.”
The offer was again recommended by the Hipgnosis board, which said it was “in the best interests of Hipgnosis shareholders as a whole.”
Hipgnosis was founded in 2018 by music executive Merck Mercuriadis to make music rights a mainstream asset class. The company has a large music portfolio that also includes the Red Hot Chili Peppers and Shakira.
Last year, shareholders voted against continuing the company, triggering a strategic review by a new board and ultimately a sale process.
Concord’s offer on Wednesday will once again cast doubt on the future of the music rights company. People close to Blackstone said the private equity group is reviewing its options. Blackstone has made repeated but lower offers to the company.
Blackstone is also a partner in Hipgnosis Song Management (HSM), manager of the Hipgnosis Songs Fund.
When making his offer, Blackstone also advised his investment advisor that he had the option to purchase the entire portfolio of songs, which could be exercised at any time during the six months following the termination of his contract.
Both Blackstone and HSM have said they will legally defend this right, effectively warning against any attempt to terminate the management contract. It is not clear how Concord intends to deal with the existing management agreement.
Concord has now secured the support of investors who hold 31 percent of Hipgnosis’ issued share capital. Concord also said it intends to sell up to 30 percent of Hipgnosis’ assets within 18 to 24 months after the acquisition closes.
Concord, which is controlled by investor Alchemy Copyrights and ultimately majority owned by US pension fund Michigan Retirement, was an acquirer of music rights and businesses.
Concord will provide the majority of equity financing, with a minority of equity and debt coming from asset manager Apollo.
Concord’s increased offer represents an increase of approximately 7.8 percent over the original offer, or 42.6 percent over the closing price of 71 pence per share on the last day before the offer.