Blackstone set for Hipgnosis victory after rival suitor refuses to increase bid

Apollo-backed Concord has bowed out of a bidding battle for Hipgnosis Songs Fund after saying it will stick with its lower offer, despite being outbid to buy the music rights owner of artists including Beyonce and Mark Ronson.

Hipgnosis agreed late last month to a higher 1.56 billion US dollar (£1.25 billion) takeover by US private equity firm Blackstone in what marked the latest twist in the takeover tussle.

Blackstone offered 1.30 US dollars (£1.04) a share for the company, trumping rival suitor Concord Chorus’ 1.25 US dollars (£1) a share bid and winning the backing of the Hipgnosis board.

Concord – indirectly controlled by Alchemy Copyrights, which acquired Hipgnosis rival Round Hill Music last year – said on Thursday that its offer was “final and will not be increased”.

The bidding war between Concord and Blackstone has engulfed the music rights giant of late, pushing its share price up by more than 50% since it kicked off in mid-April.

US-based Concord made an initial offer worth £1.12 billion on April 18, which Blackstone then upped with a £1.2 billion bid.

Concord came back with another offer valued at 1.51 billion US dollars (£1.21 billion), which Hipgnosis’s board recommended to shareholders, before Blackstone’s higher bid.

Blackstone also owns a majority stake in Hipgnosis’s investment adviser, Hipgnosis Song Management (HSM), which manages artists and songwriters for the fund.

HSM has a so-called call option to make a higher offer for the Hipgnosis portfolio if its advisory deal is broken off.

Blackstone has said its offer is separate to HSM.

Founded by Beyonce’s former manager Merck Mercuriadis and Chic co-founder Nile Rodgers in 2018, Hipgnosis holds the keys to some of the music industry’s best-known assets.

It also owns the rights to tracks by Blondie, the Red Hot Chili Peppers and Shakira.

Any deal would need backing from investors to go ahead.

It comes amid an increasingly strained relationship between the board of Hipgnosis and HSM.

HSM threatened last month to “use all means necessary” to defend its contractual position and interests.

It follows Hipgnosis calling for HSM to agree an orderly termination of their investment advisory agreement in order to help the deal pass.

Bosses at Hipgnosis Songs Fund had previously warned that the call option held by HSM was damaging the value of the portfolio and,
therefore, impacting upon demand from possible suitors.

Blackstone is one of the biggest alternative investment managers in the world, with vast holdings in the real estate, insurance and other sectors.