Hipgnosis shares surge after group receives Blackstone counter offer

  • Hipgnosis shares were 11% higher during the early afternoon on Monday
  • The firm owns the back catalogues of Blondie, Shakira and Dave Stewart

Hipgnosis Songs Fund shares took off on Monday after the music rights investor confirmed it had received a higher, rival takeover offer.

Hipgnosis, which owns the back catalogues of Blondie, Shakira and Eurythmics co-founder Dave Stewart, accepted a £1.1billion acquisition approach from US rival Concord Music last week.

However, private equity giant Blackstone has come forward with a $1.24 (£1) per share proposal valuing the London-listed business at £1.2billion. 

Atomic: Hipgnosis Songs Fund owns the back catalogue of American rock band Blondie, whose lead singer is Debbie Harry (pictured)

Hipgnosis shares were 11 per cent higher at 102p during the early afternoon on Monday, making them the FTSE 250 Index’s second-biggest riser behind industrial equipment supplier Tyman. 

It follows a challenging period for the company, which has contended with investor revolts, disputes with co-founder Merck Mercuriadis and a shrinking portfolio valuation.

According to Sky News, the bid was the fourth from Blackstone, with the previous three worth 82p per share, 88p and ‘marginally less’ than Concord’s 93.2p per share.

Having reviewed the latest deal with its financial adviser, Singer Capital Markets, Hipgnosis bosses said they were ‘minded to recommend’ the Blackstone bid to shareholders should the private equity firm declare a ‘firm intention to make an offer’.

But they continue to unanimously recommend the bid from Concord, whose parent company, Alchemy Copyrights, bought the Round Hill Music Royalty Fund last year for £375million.

Hipgnosis was co-founded in 2018 by Chic guitarist Nile Rodgers and Canadian-born Mercuriadis, who previously managed artists like Morrissey, Iron Maiden, Pet Shop Boys and Sir Elton John.

It has spent over £2billion acquiring songs and songwriter catalogues, from the Kaiser Chiefs to Neil Young, Mark Ronson and the Red Hot Chili Peppers.

The business earns royalties every time a song whose rights it owns is played, but its catalogues have declined in value over the past two years as interest rate hikes have made other alternative asset classes like bonds more attractive.

Last year, Hipgnosis agreed to sell some of its catalogues to Blackstone in order to reduce debts and fund a share buyback.

At an extraordinary general meeting, though, Hipgnosis’s investors voted against both the sale and the group’s continuation as an investment trust.

More recently, Hipgnosis cut its portfolio’s value by more than a quarter following a review into its assets by investment banking firm Shot Tower Capital. 

Russ Mould, investment director at AJ Bell, said Hipgnosis shareholders ‘will be keen to hear the final note in a stock market listing which has been more soap opera than Glyndebourne.’

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