Private equity giant Blackstone offered $1.5 billion to buy the Hipgnosis Songs Fund on Saturday (April 20), marking a major escalation in the battle for control of the troubled music rights fund and Neil Young song rights collection Journey , Lindsey Buckingham. Blondie and others.
Blackstone is offering $1.24 per share in an all-cash offer that represents an 8.7% premium to the stock's closing price the previous day and is significantly higher than Concord Chorus' $1.4 billion takeover offer based in Nashville for the fund earlier this week.
Blackstone already owns two other Hipgnosis-branded entities — music-asset private equity fund Hipgnosis Songs Capital and investment adviser Hipgnosis Song Management — and its offering on Saturday showed the private equity behemoth is eager to bolster its holdings. of to maintain its assets under the Hipgnosis umbrella.
The five-year-old, London-listed Hipgnosis Songs Fund has slashed its net asset value and shareholder dividends in recent months as it struggled to deal with accounting errors and infighting between the board and the investment manager that have angered investors who have already disappointed by an underwhelming share price.
On Thursday (April 18), the board announced in a filing with the London Stock Exchange that it had agreed to recommend a $1.402 billion takeover offer from Concord to shareholders, which values each Hipgnosis share at £0.93 (1, $14). While the board said institutional investors representing 30% of the fund's shares were prepared to vote in favor of the deal with Concord, it still needs shareholder approval from investors who collectively own 75% of the shares.
Blackstone's Hipgnosis Song Management, the investment adviser to the public fund and the private fund (Hipgnosis Songs Capital), has the right to outbid Concord and any other competing bidders to take the fund's assets private, pursuant to an option in the contract of that set when the fund was listed in 2018.
The selection was created with unique musical rights sensibilities in mind. The Hipgnosis Songs Fund was founded and built by Merck Mercuriadis, a longtime music executive and manager of artists including Elton John, Beyoncé and Guns N' Roses. Mercouriadis used his connections in the music industry to build the fund's rights portfolio to hit songs, and this option in the investment advisory contract was designed to give artists confidence that their catalogs would never change hands – which angered the Taylor Swift.
But since Hipgnosis Songs Fund investors served the board the equivalent of a no-confidence vote last fall, that choice has presented hurdles for the board in its bid to secure outside offers for the portfolio.
In its offer, which quotes Concord's offer as $1.16 per share due to currency fluctuations, Blackstone said it “strongly encourages the Hipgnosis board to recognize the significant increase in value available to all shareholders pursuant to the terms of its Fourth Proposal, $1.16 as set forth in the Concord Offer and to work with Blackstone to reach agreement on a unanimously proposed Corporate Offer in an expeditious manner.”
