Kylie music label BMG in rival approach for Hipgnosis

The music giant which counts Kylie Minogue, Lenny Kravitz and Fatboy Slim among its roster of global artists has expressed an interest in buying Hipgnosis Songs Fund (HSF), the London-listed company.

Sky News has learnt that BMG, which is wholly owned by the German media and publishing giant Bertelsmann, approached HSF several weeks ago with an indicative offer.

City sources said on Monday that BMG's proposal was pitched significantly below those of both Blackstone and Concord Music, which have in recent days exchanged fire in a public bidding war for HSF.

BMG's interest in a takeover of HSF is said to have diminished, and insiders said they did not expect it to compete with the other suitors for HSF, which owns songs by Blondie and the Kaiser Chiefs.

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On Saturday, Blackstone confirmed an exclusive Sky News report that it had tabled a string of offers for HSF amid escalating tensions between the listed music company and its investment adviser, Hipgnosis Song Management (HSM) - in which Blackstone is a 51% shareholder.

Its proposal, which trumps one made last week by Concord Chorus, a bidding vehicle backed by Apollo Global Management, triggered a sharp rise in HSF's shares on Monday morning.

Further offers from the two parties are conceivable, according to City analysts.

The remainder of HSM is owned by Merck Mercuriadis, a former manager of Beyonce and Sir Elton John, who launched Hipgnosis in 2018 with the aim of turning music royalties into a mainstream asset class.

He struck a $1bn deal three years later for Blackstone to provide firepower for buying music rights and managing catalogues.

Shares in HSF soared more than 10% to 102p on Monday, indicating investors' belief that a bidding war will ensue.

BMG and HSF declined to comment.