The personal fairness titan Blackstone is that this weekend drawing up plans for a £1.2bn takeover bid for the proprietor of songs carried out by Blondie, the Kaiser Chiefs and the Purple Sizzling Chili Peppers.
Sky Information can solely reveal that Blackstone has already tabled a number of affords to purchase Hipgnosis Songs Fund (HSF), the London-listed music rights funding firm.
The primary was price 82p-a-share, insiders stated, whereas one other was pitched at 88p and the latest was price marginally lower than a 93.2p-a-share bid for HSF unveiled on Thursday from Harmony Refrain, a music and theatrical rights firm.
Sources stated that Blackstone, which is being suggested by funding bankers at Jefferies, was now contemplating making the next supply for HSF, which trades on the London Inventory Alternate beneath the ticker SONG.
One added that Blackstone had been “shocked” by the announcement this week that SONG’s board had really helpful the bid from Harmony Refrain – which is backed by Apollo International Administration – given its personal ongoing conversations about a proposal.
The particular person additionally questioned HSF’s resolution to advocate a proposal “at first of a bidding conflict, with out trying to extract higher worth for shareholders”.
A supply near HSF disputed that characterisation.
A takeover of the corporate would crystallise worth for Hipgnosis shareholders, who noticed the shares hunch to a document low in March of about 56p within the wake of a discount within the worth of its portfolio and a suspension of dividend funds.
HSF’s troubles have been performed out for months within the public area, culminating final October in a choice by shareholders to reject its board’s aim of securing their backing for its continuation.
Shakira. Pic: Amy Harris/Invision/AP
The corporate has been mired in bitter recriminations and authorized arguments over its efficiency and governance.
A evaluate performed by Shot Tower Capital, a specialist adviser, concluded in March that SONG’s property have been price a fifth lower than Hipgnosis Tune Administration (HSM), its funding adviser, had reported final September.
Blackstone is already deeply immersed in HSF’s future as a result of it owns a 51% stake in HSM, which has a contract to handle the SONG property.
If HSM agreed to terminate the contract between them, it could launch as much as $25m for HSF though analysts say it’s unclear why HSM would willingly forego any money it believes is owed to it.
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One of many obstacles dealing with Blackstone in any new supply lies in the truth that the SONG board has acquired irrevocable acceptances of the Harmony Refrain bid from over 23% of shareholders.
These solely fall away within the occasion {that a} rival bidder tables a proposal price not less than 10% extra – on this case over 102p-a-share.
Nevertheless, HSM additionally has a name possibility in its administration settlement with HSF which permits it to amass the portfolio of music property even when Harmony Refrain is profitable, on the similar worth it pays.
The decision possibility is known to evaporate if the administration contract is terminated for trigger.
The authorized disputes involving the businesses, which insiders have left the scenario finely balanced, with a potential compromise settlement between them additionally being floated by traders.
A supply near Blackstone stated it was very assured in its contractual place.
Artists whose catalogues are owned by the listed firm additionally embrace Neil Younger and Mark Ronson.
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The rest of HSM is owned by Merck Mercuriadis, a former supervisor of Beyonce and Sir Elton John, who launched Hipgnosis in 2018 with the purpose of turning music royalties right into a mainstream asset class.
He struck a $1bn deal three years later for Blackstone to supply firepower for getting music rights and managing catalogues.
Since then, a number of the world’s most distinguished financiers, together with the likes of Apollo and KKR, have developed an identical urge for food to purchase into music property.
In February, Mr Mercuriadis moved from turning into CEO of HSM to the chairman’s function, with Ben Katovsky taking on as CEO.
Sources emphasised on Saturday that Blackstone’s curiosity in buying HSF was on a standalone foundation and was unbiased of Mr Mercuriadis.
That stance is prone to increase questions concerning the buyout big’s ongoing relationship with the Hipgnosis founder.
Blackstone is without doubt one of the world’s strongest traders, with a whole lot of billions of {dollars} of ‘dry powder’ out there for funding.
When its alliance with Mr Mercuriadis was unveiled two-and-a-half years in the past, Qasim Abbas, a senior managing director in Blackstone’s tactical alternatives crew, stated: “This partnership underscores the long-term, sustainable worth we see in inventive content material throughout the broader leisure business.
“The music business has been on the forefront of the fast-growing streaming economic system and is unlocking new methods of consuming content material.”
Shares in HSF closed on Friday at 91.9p, giving it a market capitalisation of simply over £1.1bn and marginally beneath the extent of the really helpful supply from Harmony Refrain.
On Saturday, Blackstone and HSF each declined to remark.
