Blackstone is offering US$1.30 (£1.04) per share for the company, beating rival Concord’s US$1.25 (£1) per share offer made last week.
Hipgnosis’ board of directors recommended the offer to its shareholders, withdrawing its support for Concord’s offer.
The bidding war between Apollo Global Management-backed Concord and Blackstone has recently engulfed the music rights giant, sending its stock price soaring more than 50% since its mid-April launch.
Founded by Beyoncé’s former manager Merck Mercuriadis and Chic co-founder Nile Rodgers in 2018, Hipgnosis holds the keys to some of the music industry’s best-known assets.
He also owns the rights to songs by Blondie, Red Hot Chili Peppers and Shakira.
Hipgnosis said it was recommending the enhanced deal to its shareholders, urging them to take “no further action” regarding last week’s Concord offer.
Any deal would require investor support to move forward.
Robert Naylor, Chairman of Hipgnosis, said: “Since we began our strategic review, we have had a clear focus on examining all options to deliver shareholder value.
“We are delighted that, following competitive interest in the Hipgnosis acquisition, our investors now have the opportunity to realize their participation immediately at an increased premium.”
The takeover approaches come amid increasingly strained relations between Hipgnosis’ board of directors and its investment advisor, Hipgnosis Songs Management (HSM).
HSM threatened earlier this month to “use all necessary means” to defend its contractual position and its interests.
This follows Hipgnosis calling on HSM, which is majority owned by Blackstone, to agree to an orderly termination of their investment advisory agreement in order to facilitate the completion of the deal.
Blackstone is one of the world’s largest alternative investment managers, with extensive holdings in real estate, insurance and other industries.
Qasim Abbas, senior managing director of Blackstone, said: “Our offer price, which was unanimously recommended by the board of directors, represents a significant premium to the unaffected share price and allows shareholders to realize immediate and attractive value for their shares.
“The offer is the result of extensive discussions and negotiations with the board of directors and today provides shareholders with certainty of liquidity.
“Blackstone is a long-term investor with extensive experience investing in the media and entertainment sectors, including music rights.
“The breadth of the Blackstone platform, combined with our operational expertise, will support and increase the value of the rights acquired. »
