Concord Raises Bid for Hipgnosis Songs Fund to $1.51 Billion, Topping Blackstone's Offer

Concord, a music rights investor, has increased its all-cash offer to acquire Hipgnosis Songs Fund (HSF) to $1.25 per share, valuing the company's assets at approximately $1.51 billion. The battle for HSF highlights the growing interest and competition in the music rights sector, as investors seek to capitalize on the steady revenue streams generated by music catalogs in the streaming era.

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Salman Akhtar
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Concord Raises Bid for Hipgnosis Songs Fund to $1.51 Billion, Topping Blackstone's Offer

Concord Raises Bid for Hipgnosis Songs Fund to $1.51 Billion, Topping Blackstone's Offer

Concord, a music rights investor, has increased its all-cash offer to acquire Hipgnosis Songs Fund (HSF) to $1.25 per share, valuing the company's assets at approximately $1.51 billion. This new bid represents a 7.8% increase from Concord's previous offer of $1.16 per share and slightly edges out the competing $1.24 per share offer from Blackstone, a rival bidder.

HSF's board has unanimously recommended that shareholders approve Concord's improved offer, which has already garnered the support of shareholders representing 31.27% of the company's issued share capital. The acquisition will require the backing of investors holding at least 75% of HSF's public shares at a court meeting expected to take place on June 10, 2024.

Concord's move comes as part of its strategy to strengthen its position in the music rights industry by acquiring Hipgnosis, a company that owns and manages music copyrights. If successful, the deal would create one of the world's largest independent music rights companies, with a portfolio that includes rights to songs by popular artists such as Neil Young, Shakira, and Red Hot Chili Peppers.

Why this matters: The battle for Hipgnosis Songs Fund highlights the growing interest and competition in the music rights sector, as investors seek to capitalize on the steady revenue streams generated by music catalogs in the streaming era. The outcome of this bidding war could have significant implications for the future landscape of the music industry.

As part of its offer, Concord has stated its intention to sell up to 30% of HSF's assets within 18 to 24 months following the acquisition. The company plans to finance the deal through a combination of debt and equity, with the majority of the equity financing coming from Concord and minority participation from Apollo Funds, who will also provide the debt.

Blackstone, the world's largest private equity firm, has yet to table a firm bid for Hipgnosis. However, as a majority shareholder in Hipgnosis' investment adviser, HSM, Blackstone holds a call option that could allow it to make a higher offer for Hipgnosis' portfolio if their advisory agreement were to be terminated. This "HSM factor" could potentially lead to legal battles or drive up the price in an intensified bidding process.

Merck Mercuriadis, the founder of Hipgnosis Songs Fund, initiated a strategic review of the company last year after shareholders voted against the continuation of the fund. Concord's increased offer and the prospect of a higher counter bid from Blackstone have sent HSF's shares climbing, as investors

Key Takeaways

  • Concord raises offer to acquire Hipgnosis Songs Fund to $1.51B, up 7.8%.
  • Hipgnosis board recommends Concord's improved offer, supported by 31.27% of shareholders.
  • Acquisition would create one of world's largest independent music rights companies.
  • Concord plans to sell up to 30% of Hipgnosis' assets within 18-24 months.
  • Blackstone holds a call option that could lead to a higher counter-bid.