The race to acquire UK-listed Hipgnosis Songs Fund has taken a turn today (May 9) as Concord announces that it will not raise its latest offer – leaving global investment firm Blackstone as the frontrunner in the ongoing takeover battle.
The bidding war for Hipgnosis Songs Fund (HSF), a company boasting a vast music catalog, started in mid-April when Concord, through Concord Chorus Ltd, launched an opening bid of $1.40 billion or $1.16 per share. Partly financed by Apollo Global Management, this initial offer aimed to secure all of HSF’s assets.
Then Blackstone entered the fray, countering with a $1.50 billion proposal, or $1.24 per share, on April 20.
Concord responded by upping its offer to $1.511 billion, or $1.25 per share, four days later.
The back-and-forth bidding continued when Blackstone returned on April 29 with a revised offer of $1.572 billion, or $1.30 per share.
However, Concord’s latest announcement signifies its withdrawal from the competition, leaving Blackstone in a strong position.
“Concord Bidco confirms that its offer of $1.25 per Hipgnosis Share is final and will not be increased,” Concord said in a statement obtained by MBW.
“Concord Bidco confirms that its offer of $1.25 per Hipgnosis Share is final and will not be increased.”
Concord
Concord did not disclose its reasons for stepping aside. Its final offer contained a clause that if it won the takeover battle, it would resell around 30% of HSF’s catalog within 24 months after the acquisition.
The Hipgnosis Songs Fund board had earlier recommended Blackstone’s offer to its shareholders, while withdrawing its previous recommendation of Concord’s $1.25-per-share offer.
Taking into account HSF’s debt, Blackstone’s latest offer values the company in the region of USD $2.2 billion, higher than a recent valuation by Shot Tower Capital, which had a midpoint of $1.95 billion (based on HSF’s performance as of the end of September 2023).
Blackstone recently confirmed that it plans to “further develop the potential of Hipgnosis’ portfolio” following the acquisition.
This could involve merging HSF with Blackstone’s existing music holdings, most likely its private Hipgnosis Songs Capital (HSC) fund.
“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,” Blackstone said when announcing its $1.572 billion bid last month.
“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 has also given a vote of confidence to Hipgnosis Song Management (HSM), the investment adviser of both HSF and HSC, which Blackstone co-owns with Merck Mercuariadis.
Blackstone said last month: “[Blackstone’s Bidco] attaches great importance to the skill and experience of HSM’s management and employees and recognises the contributions they have made to the development of the Hipgnosis portfolio and the business. It is therefore anticipated that HSM will continue to be involved in managing the assets owned by Hipgnosis.”
Additionally, Blackstone has indicated that it might sell or restructure Hipgnosis Songs Group LLC (HSF’s US songs administration business) within six to nine months of acquiring HSF.
Blackstone boasts $1.1 trillion in assets under management across various sectors as of March 31, according to its website. HSF, on the other hand, has amassed a collection of 138 catalogs containing rights to over 40,000 songs.
The private equity firm seeks to complete the acquisition of HSF in the third quarter of 2024.
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