Bidding war for Hipgnosis escalates with Blackstone striking $1.6billion deal

The bidding war for Hipgnosis Song Fund has escalated, as Blackstone has agreed to acquire the company for $1.6billion (£1.28b).

The deal will see Blackstone value the music rights investor at $1.30 (£1.04) per share, and has trumped a previous offer from Concord for the music rights of artists including Shakira, Ed Sheeran, Red Hot Chili Peppers, Neil Young and more. The offer put forward by Concord was $1.25 per share (£1).

Blackstone has already acquired the rights to songs by Justin Bieber and Justin Timberlake, and this current deal will see more than 65,000 more tracks added to its catalogue.

As highlighted by Reuters, Blackstone has also invested in U.S. performance rights organisation SESAC – whose affiliates include rock veteran Bob Dylan and 16-time Grammy winner Adele.

Its offer of $1.6billion was made today (April 29), and comes just days after Concord outbid the firm by 10 cents, and won Hipgnosis’s board backing for the deal. Hipgnosis has since withdrawn its recommendation for the offer and followed through with the offer from Blackstone.

“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,” said Hipgnosis Chairman Robert Naylor in a new statement (via Reuters).

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

The news of a deal comes after the music fund – set up and launched by Chic legend Nile Rodgers and Merck Mercuriadis (former manager of Elton John and Beyoncé) – was mired by financial troubles last year. These included concerns around valuations, board and legal battles and a shareholder revolt against a catalogue sale deal.

Last December, Hipgnosis was set to share its half-year results, but said it was delaying the publication of the results due to concerns that music catalogues and songs are not being valued high enough.

In March, it was reported that the Songs Fund hit a record low, as a review estimated the fair value of its catalogue at between £1.8billion and just over £2billion. The report – carried out by its lead adviser Shot Tower – showed that the value had declined by at least a fifth on that reported by Hipgnosis in September 2023.

The stock hitting a record low also comes after reports emerged that the brand spent $1billion (£720m) on acquiring artists’ back catalogues in 2021. These included purchasing the catalogues of artists including Lindsey Buckingham and Blondie, as well as Jimmy Iovine’s worldwide producer royalties and half of Neil Young’s songs in a deal estimated at $150million (£110million).

Shakira also sold all 145 of her songs to Hipgnosis, including ‘Hips Don’t Lie’, ‘She Wolf’ and ‘Whenever, Wherever’, all part of the deal.

At the time, Mercuriadis said that cultural importance is key when it comes to the artists whose back catalogues they have acquired.

“So, with over £1bn invested, we only own 57,000 songs. But 10,000 of them are Top 10 songs, almost 3,000 of them are No.1 songs. So it’s a very small catalogue, relative to Universal, Warner or Sony. But the ratio of success within that catalogue is very high, there are very few songs that are not successes.”

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