Hipgnosis Songs Fund is at the center of a bidding war after Apollo-backed US Investment Group Concord beat a rival bid from Blackstone, raising their own offer to $1.5bn.
Blackstone over the weekend presented a proposal to its board of directors to purchase the music rights group at $1.24 in cash per share to try and derail Concord’s recommended offer.
Concord announced on Wednesday that it would offer $1.25 per share for Hipgnosis Songs Fund. Concord stated that it is “committed to becoming the new owner” of Hipgnosis.
Hipgnosis’ board has again recommended the offer, saying that it is “in the interest of Hipgnosis as a group”.
Hipgnosis, founded in 2018 by music executive Merck Mercuriadis, aims to make music rights a mainstream asset. It has a wide portfolio of music, including Red Hot Chili Peppers (RHP) and Shakira.
Last year, shareholders voted against continuing the company. This prompted a review of its strategic direction by a newly appointed board and eventually a sale.
Blackstone’s close associates have said that the private equity firm is evaluating its options. Concord’s Wednesday offer will once again put the future of music rights company in question. Blackstone has repeatedly made lower offers for the company.
Blackstone is also a part-owner of Hipgnosis Song Management, the manager for Hipgnosis Songs Fund.
Blackstone warned that its investment advisor had the option to buy the entire music portfolio at any time within the six months following the termination.
Blackstone and HSM both said that they would defend this legal right, warning effectively against any attempts to rip-up the management contract. Concord has not yet made it clear how they will deal with the current management contract.
Concord now has the backing of investors who hold 31 percent of Hipgnosis’s issued share capital. Concord said that it would sell up to 30% of Hipgnosis assets in a period between 18 and 24 months after the completion of the purchase.
Concord, controlled by Alchemy Copyrights, and ultimately owned by US pension fund Michigan Retirement in its majority, has acquired music rights and companies.
Concord will provide most of the equity funding, while Apollo Asset Management will contribute a small amount of debt and a smaller portion of equity.
The increased Concord offer represents a 7.8 percent increase on its initial offer or a 42.6% increase on the closing price at 71p per share the day before the bid.