Concord has upped its offer for Hipgnosis Songs Fund.
The investment fund is now the subject of a bidding war with the Nashville-based music company responding to rival firm Blackstone’s interest in acquiring Hipgnosis at the weekend.
Concord’s offer of $1.16 per share on April 18 – approved by the Hipgnosis board – has now been increased to $1.25 per share. A substantial minority of investors (31%) had accepted the original offer. The new offer will be put to a full shareholder vote.
“The Hipgnosis directors believe that the increased Concord offer is in the best interests of Hipgnosis shareholders as a whole, and accordingly unanimously recommend that Hipgnosis shareholders vote in favour of the resolutions required to implement the increased Concord offer to be proposed at the court meeting and the general meeting, which are due to be held on or around 10 June 2024,” said a statement from Hipgnosis Songs Fund’s board.
US private equity firm Blackstone’s proposal (not a formal offer) to the Hipgnosis board at the weekend was for $1.24 per share, which valued the investment fund at $1.5 billion. Concord has now upped that by a cent a share and it will now fall to Blackstone to decide on making a formal offer at a higher rate.
The increased Concord offer represents a premium of 42.6% to the closing share price of £0.71 on April 17.
The Concord offer was made by Concord Chorus, backed by Alchemy Copyrights, which acquired Round Hill Music last year. Apollo Global Management will finance the acquisition through debt and an indirect minority interest.
In making its increased offer, Concord said it now intends to sell up to 30% of Hipgnosis' assets within a period of 18 to 24 months following completion of the acquisition.
The Hipgnosis catalogue includes shares in songs and catalogues by artists including Shakira, Journey, Ed Sheeran, Neil Young, Christine McVie, Lindsey Buckingham, Blondie, Nile Rodgers, Pusha T, and dozens more.
Bob Valentine, CEO of Concord, said: "We are pleased to announce this increased offer for Hipgnosis, which has again been unanimously recommended by its board and has the support of shareholders representing 31.27% of Hipgnosis' issued share capital. We continue to believe that this is the best outcome for Hipgnosis shareholders as it provides them with the opportunity to realise their investment in cash at a significant premium to the price where the shares were trading before our bid last week."
(Updated: April 25): Blackstone has responded to the increased offer with the following statement: "Blackstone strongly advises Hipgnosis shareholders to take no action and is considering its options. A further announcement will be made in due course."
Blackstone operates a separate fund, Hipgnosis Songs Capital, in partnership with Hipgnosis Song Management (HSM), which was founded by Merck Mercuriadis.
The takeover of Hipgnosis is complicated by the call option that HSM has on acquiring Hipgnosis Songs Fund upon termination of its investment adviser contract.
Earlier this week, Hipgnosis Song Management (HSM) hit back at the Hipgnosis’ board’s criticism by saying it had acted “appropriately and professionally” under the terms of the investment advisory agreement, adding that it would “vigorously protect its interests” should that agreement be terminated. Under those circumstances, HSM, which has financial backing from Blackstone, would clearly be ready to exercise its call option to acquire Hipgnosis Songs Fund – although that could lead to a legal battle.
Hipgnosis Songs Fund had to launch a strategic review last year following a shareholder vote, which halted a proposed catalogue sale and also saw the exit of the chair Andrew Sutch.
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