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Blackstone and Concord in bidding war for Hipgnosis catalog

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Apr 25, 2024
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Illustration: Annelise Capossela/Axios

A bidding war between Apollo-backed Concord and Blackstone has broken out for Hipgnosis Songs Fund, the troubled U.K.-based music royalties company.

Why it matters: The back-and-forth between the two shows no signs of slowing and is good news for Hipgnosis' investors, who are watching the value of the business soar.

The latest: Concord increased its takeover offer to $1.51 billion on Wednesday, up from the $1.4 billion bid it agreed to last week. That topped a $1.5 billion rival bid from Blackstone earlier this week.

  • Blackstone responded to Concord's increased offer this morning by telling Hipgnosis shareholders "to take no action" while it considers its options.
  • As part of its newest offer, Concord said it would sell as much as 30% of Hipgnosis' assets should the deal go through.
  • Concord CEO Bob Valentine told Axios last week that the initial deal had pre-approval from nearly 30% of shareholders. Wednesday's new offer was unanimously recommended by Hipgnosis' board.
  • Apollo, Concord's longtime backer, is helping fund the acquisition by providing debt capital and it will have an indirect minority interest in the acquiring entity.

Catch up quick: Hipgnosis Song Fund includes the catalogs of Barry Manilow, Blondie, Shakira, the Red Hot Chili Peppers and Neil Young.

Context: Blackstone has a long history with Hipgnosis and its founder, Merck Mercuriadis.

  • The PE giant backs a sister fund called Hipgnosis Songs Capital, which is also managed by Mercuriadis. Last year, Hipgnosis Songs Fund tried to sell roughly a fifth of its catalog to Hipgnosis Songs Capital for £363 million ($452 million in today's dollars), before investors voted it down.
  • Additionally, Blackstone and Mercuriadis co-own Hipgnosis Songs Management, the investment adviser to HSF. That relationship has come under heavy scrutiny by HSF's board in recent months.
  • Further complicating matters is HSM's six-month option to buy the entire HSF catalog should the two terminate their investment advisory agreement.

💭 Tim's thought bubble: Given that HSF was circling the drain after its investors voted to discontinue the fund, investors are going to end up with a sizable premium on their shares on their way out.

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