Hipgnosis backs £1.3bn private equity takeover by Blackstone
The struggling owner of music back catalogues ranging from Shakira to the Red Hot Chili Peppers has agreed a $1.6bn (£1.3bn) improved takeover offer from the US private equity investor Blackstone.
Hipgnosis Songs Fund said it was recommending the offer, which trumped a $1.4bn bid by the US-based royalties fund Concord Music.
The takeover would mark the end of a turbulent six years for Hipgnosis as a listed company in London. The company was founded in 2018 by Merck Mercuriadis, the former manager of acts including Elton John, Iron Maiden, Guns N’ Roses and Beyoncé.
Mercuriadis used his music industry connections to spend millions on the rights to 138 catalogues with more than 40,000 songs, in the hope that they would provide a steady stream of income that would be attractive to investors.
However, the company ran into trouble because of rising interest rates and changes to the valuation of its songs. Investors voted in October against continuing the struggling fund in its then form, forcing it to review its options.
Other artist back catalogues owned by Hipgnosis include works by Barry Manilow, Blondie, Enrique Iglesias, Justin Bieber, Justin Timberlake, the Kaiser Chiefs, Neil Young and Nile Rodgers.
Blackstone had last week indicated it was considering a firm offer for Hipgnosis. The confirmed offer is equivalent to 104p a share, higher than Hipgnosis’s 100p float price, after its price fell as low as 56p in March. Shares were up by 2.3% at 106p on Monday morning, after the agreed takeover by Blackstone was announced.
The bid is 4% higher than Concord’s, and Blackstone said it was a 48% premium to the closing price before the first talks began.
Blackstone has extra leverage in the bid battle because of its previous relationship with Hipgnosis Songs Management (HSM), the company set up by Mercuriadis to act as investment adviser to the main fund but then removed amid the turmoil. While the bid is separate to that investment, Blackstone has threatened legal action to exercise an option to buy the Hipgnosis assets for six months after the end of the investment adviser agreement.
Robert Naylor, the chair 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.”
Qasim Abbas, the 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.”
