Hipgnosis Songs Fund has accepted a new £1.26billion takeover offer from private equity group Blackstone.
The music rights investor, which owns the back catalogues of Blondie, Shakira and the Red Hot Chili Peppers, said it agreed to a $1.30 (£1.04) per share proposal from Blackstone.
It represents a 48 per cent premium to Hipgnosis’s closing share price on 17 April before Concord Music, owner of the Round Hill Music Royalty Fund, put forward a £1.1billion bid for the company.
Higher note: Hipgnosis owns the back catalogue of rock band Red Hot Chili Peppers, whose lead singer is Anthony Kiedis (pictured)
Blackstone came along a few days later with a £1.2billion offer, having had three lower bids rejected, according to Sky News.
Following advice from investment bank Singer Capital Markets, Hipgnosis’s bosses unanimously backed the latest Blackstone proposal as ‘fair and reasonable’.
Robert Naylor, chair of Hipgnosis, said: ‘We are delighted that, following competitive interests in acquiring Hipgnosis, our investors now have a chance to immediately realise their holding at an increased premium.’
Qasim Abbas, senior managing director of Blackstone, said the offer ‘is the result of extensive discussion and negotiations with the board and provides shareholders the certainty of cash today.
The fight to buy Hipgnosis comes after a difficult period for the business, which has endured investor revolts, disputes with co-founder Merck Mercuriadis, and a shrinking portfolio valuation.
Since Mercuriadis and Chic guitarist Nile Rodgers started Hipgnosis in 2018, the firm has spent more than £2billion buying songs and songwriter catalogues.
It earns royalties every time a song whose rights it owns is played, but the value of its catalogues has declined significantly over the last two years due to interest rate rises making other income-paying asset classes like 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 per cent up at 106.2p on Monday morning, compared to its initial public offering price of 100p.
London-listed companies are currently experiencing a frenzy of takeover bids owing to their perceived undervaluation and the pound’s depreciation since the Brexit referendum.
Just last week, cybersecurity specialist Darktrace agreed to a £4.3billion offer from Thoma Bravo, while mining giant BHP pounced on smaller rival Anglo American with a blockbuster £31billion proposal.
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