Any hope Blackstone had of discouraging Concord Chorus from pursuing its bid for Hipgnosis Songs (SONG ) with the threat of legal action has been dashed after the US music rights group last night raised its cash bid for the royalties fund in an effort to retain the board’s recommendation.

Concord has lifted its recommended offer of $1.16 (93p) per share made last Thursday by 7.8% to $1.25 (101p).

This beats the indicative cash offer of $1.24 a share made by Blackstone at the weekend, which the alternative assets group was seeking to finalise in the next few days.

The improved bid values Hipgnosis at $1.51bn and is 42.6% higher than the royalties fund’s share price before Concord launched its bid. It also offers a 12.4% premium to Hipgnosis’ operative net asset value (NAV) of $1.11 a share.

Hipgnosis shares gained 1.3% to 102.75p on hopes of a higher counterbid from Blackstone. They have rallied 46% in the past week to stand above their 100p launch price six years ago. 

Concord said it was no longer offering an additional $25m payment dependent on Blackstone-owned Hipgnosis Song Management (HSM) resigning as fund manager.

However, it has gained the support of more shareholders with 31.3%, including directors, signing irrevocable letters to accept the bid.

These include Josh Gruss, the chief executive of Round Hill Music, whose investment company was bought by Concord last September in a deal overseen by Hipgnosis’ chair Robert Naylor.

Hedge fund manager Kite Lake Capital is also backing Concord. Alongside Gruss, this represents 2.47% of Hipgnosis shares.

The increased shareholder support comes despite JO Hambro Capital Management selling nearly 7m of the 20.4m shares or 1.69% it held last week when it gave its backing.

The fund manager declined to comment on its sales. 

The Hipgnosis board said that the increased Concord offer was in the best interests of shareholders and urged them to vote in favour of the deal at a meeting to be held sometime near 10 June.

In response, Blackstone ‘strongly’ advised Hipgnosis shareholders to take no action as it considered its options. It will make a further announcement in due course.

On Monday Blackstone and Hipgnosis Song Management said they would ‘vigorously’ defend HSM’s call option to buy the Hipgnosis Song portfolio within six months of having its contract terminated.

Despite a highly critical report of the fund manager published by Hipgnosis last month, they insisted there were no legal grounds to sack HSM for breach of contract, a move that would erase the call option, and said they would litigate. 

‘However this is settled, two things are clear: there is value in this portfolio and shareholders will get paid for it. By whom and how soon cannot be answered just yet,’ said Winterflood analyst Shavar Halberstadt.