Blackstone leads Hipgnosis race as Concord says no encore

Private equity giant Blackstone appeared to have emerged as the winner in the race to buy troubled music rights owner Hipgnosis Songs Fund after Apollo-backed Concord said its latest $1.25-a-share offer was final.

The $1.51bn offer from Nashville-based Concord was its second bid for Hipgnosis, but Blackstone last month hiked its offer to $1.30 per share - about $1.57bn - to win the Hipgnosis board's support for the deal.

Hipgnosis holds the rights to music by artists like Shakira, Blondie, Neil Young and Red Hot Chili Peppers.

Concord is indirectly controlled by Alchemy Copyrights, which acquired music copyright-focused investment firm Round Hill Music Royalty Fund last year for $469m.

Blackstone is a majority shareholder in Hipgnosis' investment adviser, HSM, which manages artists and songwriters for the fund and holds a call option to make a higher offer for Hipgnosis' portfolio if their advisory agreement were to be terminated.

Shareholders In October rejected a proposed $440m deal by the fund to sell 29 catalogues to Hipgnosis Songs Capital - a partnership between Blackstone and the fund's investment adviser Hipgnosis Song Management (HSM).

The dispute led to an overhaul of the board, with Robert Naylor joining as chairman in November.

Hipgnosis was founded in 2018 by Merck Mercuriadis, who managed artists including Elton John and Beyoncé, and became an adviser to the business. A spending spree saw it buying up catalogues to cash in on the popularity of streaming services, but a rise in the value of other asset classes as interest rates soared saw investors move elsewhere.

To make matters worse an independent review in March slashed the value of its music portfolio by 26% and shareholder payouts were suspended. Hipgnosis had already been forced to offload 20,000 unspecified “non-core” songs for $23.1m - a 14% discount - in December to help pay off debt.

Reporting by Frank Prenesti for Sharecast.com