Blackstone raises Hipgnosis bid to £1.26bn in takeover battle

The private equity giant has bid £1.26 billion for Hipgnosis, which owns the rights to music from artists including Beyonce and Mark Ronson.

Hipgnosis owns the rights to music from artists including Beyonce (Andrew Milligan/PA Archive) (PA Archive)

Hipgnosis Songs Fund has agreed to a 1.56 billion US dollar (£1.26 billion) takeover by US private equity giant Blackstone in the latest twist in the battle to buy the music rights owner of artists including Beyonce and Mark Ronson.

Blackstone is offering 1.30 US dollars (£1.04) a share for the company, which trumps rival suitor Concord’s 1.25 US dollars (£1) a share bid that was tabled last week.

Hipgnosis’ board has recommended the offer to its shareholders, withdrawing its backing for Concord’s bid.

The bidding war between Concord, which is backed by Apollo Global Management, 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 £1.21 billion last week, which Hipgnosis’ board recommended to shareholders, before Blackstone’s latest approach.

Blackstone also owns a majority stake in Hipgnosis’ 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 former Beyonce manager Merck Mercuriadis and Chic cofounder 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.

Hipgnosis said it recommends the improved deal to its shareholders, urging them to take “no further action” with regards to last week’s offer from Concord.

Any deal would need backing from investors to go ahead.

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

Robert Naylor, chairman of Hipgnosis

Robert Naylor, chairman of Hipgnosis, said: “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.”

The takeover approaches come amid an increasingly strained relationship between the board of Hipgnosis and HSM.

HSM threatened earlier this 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.

Blackstone is a long-term investor with deep experience of investing across the media and entertainment sectors, including in music rights

Qasim Abbas, senior managing director of Blackstone

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

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.”