Hipgnosis Songs Fund agrees to £1.3bn takeover by Blackstone
- Hipgnosis owns the back catalogs of Blondie and the Red Hot Chili Peppers
- The music rights investor previously received a £1.1 billion offer from Concord Music
Hipgnosis Songs Fund has accepted a new £1.26 billion takeover offer from private equity group Blackstone.
The music rights investor, who owns the back catalogs of Blondie, Shakira and the Red Hot Chili Peppers, said he agreed to a $1.30 per share proposal from Blackstone.
It represents a 48 percent premium to Hipgnosis’ closing share price on April 17, before Concord Music, owner of the Round Hill Music Royalty Fund, made a £1.1 billion bid for the company.
On a higher note: Hipgnosis owns the back catalog of rock band Red Hot Chili Peppers, whose lead singer is Anthony Kiedis (photo)
Blackstone came forward with a £1.2 billion offer a few days later, having done so According to Sky News, three lower bids were rejected.
On advice from investment bank Singer Capital Markets, Hipgnosis bosses unanimously backed the latest Blackstone proposal as ‘fair and reasonable’.
Robert Naylor, chairman of Hipgnosis, said: ‘We are pleased that, following competing interests in the acquisition of Hipgnosis, our investors now have the opportunity to realize their interest immediately at a higher premium.’
Qasim Abbas, senior managing director of Blackstone, said the offer “is the result of extensive discussions and negotiations with the board and provides shareholders with the certainty of cash today.”
The scramble to buy Hipgnosis comes after a difficult period for the company, which has faced investor revolts, disputes with co-founder Merck Mercuriadis and a declining portfolio valuation.
Since Mercuriadis and Chic guitarist Nile Rodgers founded Hipgnosis in 2018, the company has spent more than £2 billion buying songs and songwriter catalogues.
It earns royalties every time a song to which it owns the rights is played, but the value of its catalogs has fallen significantly over the past two years as interest rates rise, making other income-paying asset classes such as bonds more attractive.
As a result, the group’s share price almost halved between September 2022, before soaring after Concord made its offer.
Hipgnosis Songs Fund Shares were 2.3 percent higher at 106.2p on Monday morning, compared to the initial public offer price of 100p.
London-listed companies are currently experiencing a wave of takeover bids due to their perceived undervaluation and the depreciation of the pound since the Brexit referendum.
Just last week, cybersecurity specialist Darktrace agreed to a £4.3 billion bid from Thoma Bravo, while mining giant BHP attacked smaller rival Anglo American with a blockbuster £31 billion proposal.