Hipgnosis Songs Fund, the music royalties business that owns a catalogue of tracks from artists like Beyonce and Mark Ronson, could be on the brink of a takeover battle.
The company has revealed it's open to a counter bid valuing its catalogue at over £1.2billion. The firm had been contemplating selling itself, which would result in its removal from the London stock markets following a tumultuous year.
On Thursday, Hipgnosis announced it had struck a deal with US competitor Concord, who proposed to purchase the business for 93.2p per share, giving it a value of around £1.1billion. However, over the weekend, the company received a higher proposed bid from US private equity group Blackstone. They offered $1.24 (£1) per share for the business, pushing its valuation up to $1.5billion (£1.2billion).
Hipgnosis stated it had reviewed the proposal and would likely recommend the improved deal to its shareholders if Blackstone decides to make a firm offer. Any agreement would require investor support to proceed.
These takeover approaches come amid an increasingly tense relationship between the board of Hipgnosis and its investment adviser, Hipgnosis Songs Management. Merck Mercuriadis, who launched the music fund alongside former Chic frontman Nile Rodgers, stepped down as the fund manager's chief executive in February to take up the role of chairman.
Mr Mercuriadis, who previously managed global superstars such as Sir Elton John, Beyonce and Guns N' Roses, will now take a backseat in the business management. Instead, he'll focus more on liaising with songwriters and artists. Hipgnosis has stated that it will continue to endorse Concord's offer to shareholders until Blackstone confirms its intention to bid. On Monday morning, Hipgnosis shares saw an increase of about one-tenth.