Concord has officially pulled out of the bidding war for the assets of Hipgnosis Songs Fund.
The news was announced in a statement to the market on Thursday (May 16), and follows Concord’s initial declaration on May 9 that it wouldn’t be increasing its offer for HSF – leaving global investment giant Blackstone as the frontrunner in the high-stakes takeover battle for HSF.
The bidding war for HSF started in the middle of April, when Concord, via Concord Chorus Ltd, launched an opening bid of $1.40 billion or $1.16 per share. Partly financed by Apollo Global Management, this initial offer aimed to secure all of HSF’s assets.
Blackstone then submitted a counteroffer – with a $1.50 billion proposal, or $1.24 per share, on April 20.
Concord responded by upping its offer to $1.511 billion, or $1.25 per share, just four days later.
The bidding war continued when Blackstone returned on April 29 with a revised offer of $1.572 billion, or $1.30 per share.
However, Concord issued an announcement on May 9 signaling its withdrawal from the competition.
The announcement issued on May 9 stated: “Concord Bidco confirms that its offer of $1.25 per Hipgnosis Share is final and will not be increased.”
Most recently, Concord confirmed that it has officially pulled out of the race in today’s (May 16) announcement.
Concord’s statement today contained this update: “This announcement confirms that Hipgnosis has provided its consent to the Panel on Takeovers and Mergers (the “Panel”) to release Bidco from its obligations under the City Code on Takeovers and Mergers (the “Code”) to proceed with the proposed offer. Accordingly, Bidco confirms that it will no longer proceed with the offer.”
The statement added that the Panel on Takeovers and Mergers has “consented to the withdrawal” of Concord’s bid for HSF and has confirmed to both Concord and Hipgnosis that:
“(i) Bidco is released from its obligations under Rule 2.7(b) and Rule 24.1 of the Code to proceed with the offer; and
“(ii) Bidco is subject to the restrictions set out in Rule 35.1 of the Code and is prohibited from, amongst other things, making any offer for Hipgnosis for a period of 12 months from the date of this announcement. However, Bidco reserves the right to set aside the restrictions under Rule 35.1 of the Code with the consent of the Panel in the circumstances set out in Note 1 to Rule 35.1.”
Concord hasn’t disclosed its reasons for pulling out of the completion for HSF.
Its final offer contained a clause stating that if it won the takeover battle, it would resell around 30% of HSF’s catalog within 24 months after the acquisition.
On April 29, The Hipgnosis Songs Fund board recommended Blackstone’s latest (USD $1.572 billion) offer to HSF shareholders, while withdrawing its previous recommendation of Concord’s $1.25-per-share offer.
Taking into account HSF’s debt, Blackstone’s latest offer values the company in the region of USD $2.2 billion, higher than a recent valuation by Shot Tower Capital, which had a midpoint of $1.95 billion (based on HSF’s performance as of the end of September 2023).
Blackstone recently confirmed that it plans to “further develop the potential of Hipgnosis’ portfolio” following the acquisition.
This could involve merging HSF with Blackstone’s existing music holdings, most likely its private Hipgnosis Songs Capital (HSC) fund.
Additionally, Blackstone has indicated that it might sell or restructure Hipgnosis Songs Group LLC (HSF’s US songs administration business) within six to nine months of acquiring HSF.
Meanwhile, Blackstone has also given its vote of confidence for Hipgnosis Song Management (HSM), the investment adviser of both HSF and HSC, which Blackstone co-owns with Merck Mercuariadis.
Blackstone said last month: “[Blackstone’s Bidco] attaches great importance to the skill and experience of HSM’s management and employees and recognises the contributions they have made to the development of the Hipgnosis portfolio and the business. It is therefore anticipated that HSM will continue to be involved in managing the assets owned by Hipgnosis.”
Blackstone’s website reports that as of March 31, it had $1.1 trillion in assets under management across various sectors. The private equity firm seeks to complete the acquisition of HSF in the third quarter of 2024.
HSF has amassed a portfolio of 138 catalogs containing rights to over 40,000 songs.
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