Blackstone hits high note with new Hipgnosis bid
Blackstone, the American private equity behemoth, is this weekend finalising a revised offer to buy the company which owns the music catalogues of Shakira and the Red Hot Chili Peppers.
Sky News has learnt that Blackstone is preparing to lodge an improved bid for Hipgnosis Songs Fund (HSF) as early as Monday.
Its offer will trump one recommended by HSF’s board last Thursday of $1.25-a-share from Concord Music, a larger rival, according to insiders.
The latest salvo in an intensifying bidding war will underline the growing determination of the two bidders to triumph in a battle for some of the global industry’s best-known assets.
HSF also owns songs performed by artists Blondie and the Kaiser Chiefs.
Sky News revealed last weekend that Blackstone had already tabled three offers to buy the London-listed music rights investment company, with a fourth following immediately after.
It was then outbid just days later by Concord, which is backed by Apollo Global Management.
Sources said Blackstone was contemplating what they described as a significant improvement on the Concord bid, although the exact level of the offer under consideration was unclear.
A takeover of the company would crystallise value for Hipgnosis shareholders, who saw the shares slump to a record low in March of about 56p in the wake of a reduction in the value of its portfolio and a suspension of dividend payments.
HSF’s troubles have been played out for months in the public arena, culminating last October in a decision by shareholders to reject its board’s goal of securing their backing for its continuation.
The company has been mired in bitter recriminations and legal arguments over its performance and governance.
A review conducted by Shot Tower Capital, a specialist adviser, concluded in March that SONG’s assets were worth a fifth less than Hipgnosis Song Management (HSM), its investment adviser, had reported last September.
Blackstone is already deeply immersed in HSF’s future because it owns a 51% stake in HSM, which has a contract to manage the SONG assets.
HSM has a call option in its management agreement with HSF which allows it to acquire the portfolio of music assets even if Concord Chorus is successful, at the same price it pays.
The call option would be annulled if the management contract is terminated for cause, however.
The remainder of HSM is owned by Merck Mercuriadis, a former manager of Beyonce and Sir Elton John, who launched Hipgnosis in 2018 with the aim of turning music royalties into a mainstream asset class.
He struck a $1bn deal three years later for Blackstone to provide firepower for buying music rights and managing catalogues.
In February, Mr Mercuriadis moved from becoming CEO of HSM to the chairman’s role, with Ben Katovsky taking over as CEO.
Blackstone’s interest in acquiring HSF is on a standalone basis and independent of Mr Mercuriadis.
That approach may cast doubt about the buyout giant’s ongoing relationship with the Hipgnosis founder.
Blackstone is being advised by investment bankers at Jefferies, while JP Morgan is among the investment banks advising Concord.
Shares in HSF closed on Friday at 103.8p, giving it a market capitalisation of just over £1.25bn.
On Sunday, Blackstone and HSF both declined to comment.