Blackstone is putting its money where its mouth is.
Last week, Concord – partly financed by Apollo Global Management – launched a USD $1.511 billion cash bid for the portfolio of Hipgnosis Songs Fund. That was the equivalent of USD $1.25 per share.
Today (April 29), Blackstone and HSF’s board have jointly announced a new offer from Blackstone worth around $60 million more than Concord’s latest bid.
Blackstone has bid USD $1.572 billion – $1.30 per share – in cash for 100% of HSF’s share capital.
The offer is officially being made by Lyra Bidco Ltd, an entity that is fully financed by an equity investment from funds advised by affiliates of Blackstone.
The Hipgnosis Songs Fund board says it is now recommending Blackstone’s offer to its shareholders, and withdrawing its previous recommendation of Concord’s $1.25-per-share offer.
(Noteworthy: Concord’s offer contained a clause that the firm, if successful in its bid, would resell around 30% of the HSF catalog within 24 months after buying it. The Blackstone offer contains no such clause.)
With HSF’s debt taken into account, Blackstone’s latest offer values HSF at approximately USD $2.177 billion.
That is significantly larger than the valuation recently put on HSF by Shot Tower Capital, which had a midpoint of USD $1.95 billion*.
Commenting on today’s announcement, Robert Naylor, the Chair of Hipgnosis, said: “The Board is pleased to unanimously recommend this US$1.6 billion Offer for Hipgnosis from Blackstone.
“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, 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.”
Prior to the latest HSF bid, Blackstone has already made significant investments in the music business to date.
Obviously, those investments include Hipgnosis Song Management (HSM) – the investment adviser to HSF – plus Hipgnosis Songs Capital (HSC), a private fund, also advised by HSM, which Blackstone has fully financed.
Blackstone’s other investments in the music business include SESAC and Candle Media.
The announcement of Blackstone’s offer today further said: “Bidco [aka the Blackstone funds] recognises the quality and strength of the music rights catalogues Hipgnosis has acquired and developed, which are complementary to Blackstone’s current holdings of comparable assets.
“The Bidco Board believes that the Acquisition provides an exciting path forward to continue building on Blackstone’s existing interests and to utilise Blackstone’s expertise in this space to further develop the potential of Hipgnosis’ portfolio.”
Blackstone/Bidco added that, following any acquisition of HSF, it will undertake a strategic evaluation of the corporate structure of its Hipgnosis companies and any subsidiaries. That could mean a merger of the HSF and HSC funds.
Outside of this, Blackstone says that, within six to nine months following the HSF acquisition, it may sell or restructure Hipgnosis Songs Group LLC – aka Hipgnosis’ US songs administration business. Previously known as Big Deal Music, this business was acquired by HSF in September 2020.
In total, Blackstone says it has USD $1 trillion in assets under management today in all sectors, across investment vehicles focused on private equity, real estate, public debt and equity, life sciences, growth equity, opportunistic, non-investment grade credit, real assets and secondary funds.
Hipgnosis Songs Fund has built a portfolio currently comprising 138 catalogs containing copyright and/or income streams from more than 40,000 songs.
Blackstone says it currently expects to complete its acquisition of HSF, via its current offer, during Q3 2024, subject to conditions.
* This story now reflects Shot Tower’s final midpoint valuation of $1.95 billion, updated on March 28, 2024 and based on HSF figures as of September 30, 2023.Music Business Worldwide