Blackstone Declares ‘Best & Final Offer’ in Potential Hipgnosis Deal

Blackstone best offer Hipgnosis
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Blackstone best offer Hipgnosis
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Photo Credit: Clay Banks

A new report suggests Blackstone has now put in its “best and final offer” for Hipgnosis Songs Fund. The backdrop: a group of US and UK hedge funds have now acquired a potential blocking stake in Hipgnosis — potentially scuttling the acquisition.

The offer of $1.6 billion is considered its best offer, locking in a price point to prevent more negotiations ahead of a shareholder vote. Blackstone needs 75% approval from shareholders in the upcoming vote. With this move, Blackstone has prevented attempts to drive up the value of Hipgnosis.

The Financial Times analysis of the deal shows “well over a quarter of the shares are held by hedge funds that trade on the stock movements of takeover targets, leaving them with more than enough to vote down the deal next month.”

Hedge funds that now own shares in Hipgnosis include TIG, which raised its stake over the past three months to 14%. Other invested hedge funds include Glazer Capital (8%), Kryger Capital (6.6%), and Sand Grove Capital Management (6+%).

The U.S. private equity group Blackstone said it made its best and final offer in an effort to prevent more price hikes to secure these hedge fund votes—a practice called ‘greenmailing.’ Blackstone switched its offer to a scheme of arrangement, which requires the 75% shareholder approval. As part of that move, Blackstone agreed to an increase to $1.31 a share. The deal’s original takeover offer would have only required 50% of shareholders to accept the offer.

Blackstone restructured the offer into a scheme of arrangement which would prevent minority Hipgnosis stakeholders from remaining owners of their shares after the takeover. Hipgnosis Songs Fund recommended the offer in April 2024 after the bid trumped a $1.4 billion bid from the royalty fund Concord Music. Hipgnosis Songs Fund was founded in 2018 by Merck Mercuriadis, who spent millions to acquire the rights to 138 catalogs with more than 40,000 songs.