- Hipgnosis shares were up 11% by early afternoon on Monday
- The company owns the back catalogs of Blondie, Shakira and Dave Stewart
Hipgnosis Songs Fund Shares launched on Monday after the music rights investor confirmed it had received a larger takeover offer.
Hipgnosis, owner of the back catalogs of Dave Stewart, co-founder of Blondie, Shakira and Eurythmics, last week accepted a £1.1 billion buyout from US rival Concord Music.
However, private equity giant Blackstone has come forward with a proposal of $1.24 (£1) per share, valuing the London-listed company at £1.2 billion.
Atomic: Hipgnosis Songs Fund owns the back catalog of American rock band Blondie, whose lead singer is Debbie Harry (pictured)
Shares in Hipgnosis were up 11 per cent at 102p by early afternoon on Monday, making them the second-biggest gainer on the FTSE 250 Index after industrial equipment supplier Tyman.
It follows a challenging period for the company, which faced investor revolts, disputes with co-founder Merck Mercuriadis and a declining portfolio valuation.
According to Sky News, the offer was Blackstone’s fourthwith the previous three worth 82p per share, 88p, and ‘marginally less’ than Concord’s 93.2p per share.
After discussing the latest deal with financial advisor Singer Capital Markets, Hipgnosis bosses said they “intended to recommend” the Blackstone offer to shareholders should the private equity firm have a “firm intention to pursue a to make an offer’.
But they continue to unanimously recommend the bid from Concord, whose parent company, Alchemy Copyrights, bought the Round Hill Music Royalty Fund for £375 million last year.
Hipgnosis was co-founded in 2018 by Chic guitarist Nile Rodgers and Canadian-born Mercuriadis, who previously managed artists such as Morrissey, Iron Maiden, Pet Shop Boys and Sir Elton John.
It has spent more than £2 billion acquiring songs and catalogs from songwriters from the Kaiser Chiefs to Neil Young, Mark Ronson and the Red Hot Chili Peppers.
The company earns royalties every time a song it owns the rights to is played, but its catalogs have fallen in value over the past two years as interest rate hikes have made other alternative asset classes such as bonds more attractive.
Last year, Hipgnosis agreed to sell some of its catalogs to Blackstone to reduce debt and finance a stock buyback.
However, at an extraordinary general meeting, Hipgnosis investors voted against both the sale and the group’s continuation as an investment trust.
More recently, Hipgnosis cut the value of its portfolio by more than a quarter following a review of its assets by investment bank Shot Tower Capital.
Russ Mould, investment director at AJ Bell, said Hipgnosis shareholders were ‘keen to hear the closing notes on a stock market listing that has been more of a soap opera than Glyndebourne.’