Hipgnosis accepts new $1.57bn offer from Blackstone in latest bidding war twist

Private equity giant Blackstone has submitted a new, higher, bid for the Hipgnosis Songs Fund - which has been accepted by the fund’s board - in the latest twist in the bidding war for the music royalties owner.

US-based royalties fund Concord had made a bid earlier this month, before Blackstone approached the Hipgnosis board over a higher offer, prompting Concord to up its offer.

However, Blackstone has returned with an offer that values the fund - which owns the rights to hits by artists like Beyonce, Shakira and 50 Cent - at $1.57 billion, which the board of the fund has accepted.

If Blackstone wins the bidding war, that would be a victory for Hipgnosis Songs Management (HSM), the business backed by Blackstone and previously led by Merck Mercuriadis that manages the fund’s portfolio. Concord had considered cutting HSM loose

HSM owns a call option that allows it to buy the Hipgnosis portfolio for the highest of the fair value of the portfolio, the fund’s share price or the top rival bid on the table. That would appear to give Blackstone the upper hand if the bidding war was to continue.

Robert Naylor, the Chair of Hipgnosis, said: “The board is pleased to unanimously recommend this US$1.6 billion Offer for Hipgnosis from Blackstone. 

“Since we started our strategic review, we have been clearly focused on looking at all the options to deliver shareholder value. We are delighted that, following competitive interests in acquiring Hipgnosis, our investors now have a chance to immediately realise their holding at an increased premium.”

Qasim Abbas, senior managing director of Blackstone, said: “Our offer price, which has been unanimously recommended by the Board, represents a significant premium to the unaffected share price and allows shareholders to realise immediate and attractive value for their shareholding. The offer is the result of extensive discussion and negotiations with the Board and provides shareholders the certainty of cash today.

“Blackstone is a long-term investor with deep experience of investing across the media and entertainment sectors, including in music rights. The breadth of the Blackstone platform, combined with our operational expertise, will support and enhance the value of the acquired rights.”