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Blackstone has announced plans to sweeten its offer for Hipgnosis as part of a restructured bid for the music rights owner designed to make completing the deal easier.
The US private equity group wants to switch to a so-called scheme of arrangement to execute its offer, a move that should avert a situation in which a minority of Hipgnosis investors can resist the bid and remain owners of the shares.
As part of the move, Blackstone has agreed to a modest increase in its offer from $1.30 a share to $1.31.
Blackstone has spent the past few months battling with music rights owner Concord for control of Hipgnosis, a London-listed group that owns a portfolio of 138 catalogues with more than 40,000 songs.
Under the new scheme of arrangement, Blackstone will need approval for its offer from 75 per cent of Hipgnosis shareholders, but once it has achieved that, the remaining 25 per cent will have to accept it.
It should allow Blackstone to effectively squeeze out any minority shareholders more quickly than if the buyout group had stuck to its previous offer structure.
The move comes as hedge funds have snapped Hipgnosis shares after the takeover battle with Concord started in April. The new offer has received approval from the UK’s Takeover Panel. The revised offer from Blackstone values Hipgnosis at almost $1.6bn.
In a statement on Monday, Blackstone said the increase in price “has come about as a result of discussions between [Blackstone and the Hipgnosis board] and in part reflects Hipgnosis incurring lower adviser fees in respect of the transaction than previously expected”.
The move is the latest complication in a protracted takeover battle for Hipgnosis, which pioneered music rights as an asset class but has struggled as higher interest rates have hit its business model.
Shareholders last year voted against the continuance of the company, sparking a strategic review by a new board and ultimately a sales process. However, those close to the talks said the deal should proceed smoothly once the scheme of arrangement is secured.
Blackstone already owns a majority stake in Hipgnosis’s management company, Hipgnosis Song Management, which collects fees for overseeing the listed Hipgnosis fund.
Blackstone’s investment adviser had an option, exercisable at any point in time during the six-month period following the termination of its contract, to purchase the entire portfolio of songs.
