Blackstone surpasses Concord with $1.6 billion bid for Hipgnosis Songs

Blackstone Hipgnosis deal: Asset management company Blackstone has clinched a deal to acquire Hipgnosis Songs Fund for approximately $1.57 billion, overshadowing Concord's earlier bid for the music rights owner of acclaimed artists like Shakira and Red Hot Chili Peppers, according to statements released by the companies on Monday.

Blackstone's formal offer values the esteemed music rights investor at $1.30 per share, a significant increase from Concord's previous bid of $1.25 per share tabled last Wednesday. The announcement saw a surge in Hipgnosis shares, which rose by 2.7 per cent to 1.06 pounds ($1.33) during early trading.

The acquisition will fortify Blackstone's music rights portfolio, adding over 65,000 songs to its repertoire, including tracks by legendary artists such as Blondie and Neil Young. This expanded catalog will complement Blackstone's existing music rights holdings, which feature songs by notable figures like Justin Bieber and Justin Timberlake. Additionally, Blackstone has previously invested in US performance rights organisation SESAC, whose affiliates include iconic musician Bob Dylan and multiple Grammy Award winner Adele.

This heightened bid from Blackstone comes hot on the heels of Concord's initial success in outbidding the private equity giant by a mere 10 cents, securing Hipgnosis's board's endorsement for the proposed transaction. However, in light of Blackstone's enhanced offer, Hipgnosis's board has rescinded its support for Concord's bid, signaling a shift in momentum.

Commenting on the development, Hipgnosis Chairman Robert Naylor expressed his satisfaction, stating, "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."

It's noteworthy that Blackstone holds a majority stake in Hipgnosis's investment adviser, HSM, which manages artists and songwriters for the fund. Moreover, Blackstone possesses a call option to present a superior bid for Hipgnosis's portfolio should their advisory agreement be terminated—a move entirely separate from the current proposal.

Established in 2018 by industry luminary Merck Mercuriadis, Hipgnosis embarked on a strategic review last year following a shareholder vote against the fund's continuation, leading to a period of upheaval and a dispute with HSM over the call option. Earlier, HSM cautioned Hipgnosis against terminating the advisory agreement, as the previously agreed Concord deal involved the US-based firm assuming management of Hipgnosis's assets.

(With Reuters inputs.)