Concord, a US investment group backed by Apollo Global Management, has raised its bid for Hipgnosis Songs Fund (HSF) to $1.5bn, surpassing a competing offer from Blackstone and initiating a bidding war, according to a report by the Financial Times.
Over the weekend, Blackstone proposed to the company’s board to acquire the music rights group for $1.24 per share in cash, aiming to counter Concord’s offer. Blackstone partially owns Hipgnosis Song Management (HSM), which manages HSF.
In outlining this offer, Blackstone stated that its investment adviser has the option to purchase the entire song portfolio at any time during the six months following the termination of its contract.
Both Blackstone and HSM have stated they will legally defend this right, effectively cautioning against any attempts to terminate the management contract. It remains unclear how Concord plans to handle the existing management agreement.
On Wednesday, Concord announced it would raise its bid slightly above Blackstone’s, offering $1.25 per share for HSF. This increased offer represents a rise of approximately 7.8% on its original bid, or 42.6% compared to the closing price of 71p per share on the day before the bid.
Concord has secured support from investors who hold 31% of Hipgnosis’ issued share capital. Concord also intends to sell up to 30% of Hipgnosis’ assets within 18 to 24 months of completing the acquisition.
Concord will supply most of the equity financing, with a minority of equity and debt being provided by Apollo.
The Hipgnosis board has once again endorsed Concord’s offer, stating it is in the best interests of all Hipgnosis shareholders.
Hipgnosis, founded by music executive Merck Mercuriadis and Chic frontman Nile Rodgers in 2018, was created to transform music rights into a mainstream asset class. The company owns music rights for artists including Beyoncé, Blondie, the Red Hot Chili Peppers, Neil Young and Shakira.
Last year, shareholders voted against the company’s continuation, leading to a strategic review by a new board and ultimately a sale process.
