- Concord said its $1.25 (£1) per share bid for Hipgnosis would not go any higher
- Blackstone’s pursuit of Hipgnosis comes amidst a surge in takeovers of UK firms
Blackstone looks to have won the race for Hipgnosis Songs Fund after rival suitor Concord Music said it would not raise its takeover offer for the music rights investor.
Concord, which is indirectly controlled by Alchemy Copyrights, said on Thursday its $1.25 (£1) per share bid valuing Hipgnosis at £1.21billion would not go any higher.
The group agreed to buy Hipgnosis for £1.1billion last month, backed by financing from private equity giant Apollo Global Management.
Staying put: Concord Music, indirectly controlled by Alchemy Copyrights, said its $1.25 (£1) per share bid valuing Hipgnosis at £1.21billion would not go any higher
However, a few days later, a bidding war erupted when asset manager Blackstone came forward with a £1.2billion offer after reportedly having three prior proposals turned down.
Concord, owner of the Round Hill Royalty Music Fund, followed up with its present offer before Blackstone increased its own bid to £1.26billion.
Now that Concord has refused to increase its offer, Blackstone looks set to acquire Hipgnosis, although it still needs approval from at least 75 per cent of the latter’s shareholders.
Hipgnosis was co-founded in 2018 by Chic guitarist Nile Rodgers and Canadian-born Merck Mercuriadis, who previously managed musicians like Morrissey, Iron Maiden, and Sir Elton John.
The company has spent more than $2billion purchasing back catalogues belonging to major artists, such as Neil Young, Blondie and the Red Hot Chili Peppers.
It earns royalties every time a song whose rights it owns is played, but the value of its catalogues has slumped over the past two years owing to interest rate rises making other income-paying asset classes like bonds more attractive.
Troubles worsened last October when its investors rejected a deal to sell some of the firm’s catalogues for £362million to funds advised by Blackstone and voted against continuing the business as an investment trust.
The same month, Hipgnosis cancelled dividends after being told that its royalty payments would be much lower than anticipated and began a strategic review ‘with the aim of maximising value for shareholders’.
Since then, the group has been in dispute with its investment adviser, Hipgnosis Song Management (HSM), whose chairman is Mercuriadis.
Hipgnosis wants HSM to agree an orderly termination of their investment advisory agreement in order to help the takeover go through.
But HSM warned on 22 April that it would ‘use all means necessary’ to defend its contractual position and interests.
Blackstone’s pursuit of Hipgnosis comes amidst a surge in acquisitions of London-listed companies, which are seen as undervalued compared to their global peers.
In recent years, high-profile names to fall into foreign hands have included G4S, Hotel Chocolat, fashion brand Ted Baker, and supermarket chain Morrisons.
And just in the last month, cybersecurity group Darktrace, packaging firm DS Smith, and car distributor Inchcape all agreed to be bought.
Hipgnosis shares were 2.1 per cent lower at 102.4p on late Thursday morning but have jumped by approximately 39 per cent since the year began.
