Summary:
- Hargreaves Lansdown Agrees to £5.4 Billion Takeover by CVC-led Consortium
- Shareholders to Receive 1,110 Pence per Share Plus 30 Pence Dividend
- New Offer Represents 54% Premium Over Previous Bid, Supported by Analysts
British investment platform Hargreaves Lansdown announced on Friday that it has agreed to a takeover offer valued at £5.4 billion ($6.9 billion) from a consortium led by CVC Group. The group also includes Abu Dhabi’s sovereign wealth fund and private equity investor Nordic Capital, and has stated that this offer is final.
Under the terms of the deal, Hargreaves Lansdown shareholders will receive 1,110 British pence per share along with a 30 pence per share dividend. The company’s shares rose approximately 2.2% in early trading.
This offer follows Hargreaves Lansdown’s rejection in May of a £4.7 billion bid, or 985 pence per share, which the company deemed to “substantially” undervalue its worth and future prospects. The new offer represents a 54% premium over the share price of 740 pence on April 11, the day before the initial bid.
Image Credit: HL (Hargreaves Lansdown), supplied by CNBC on 13 August, 2024.
Hargreaves Lansdown’s shares surged following the May takeover offer, which came after a challenging period marked by regulatory changes, new market competitors, and anticipated drops in interest rates.
In September 2023, the investment platform—competing with Interactive Investor and AJ Bell—unveiled a new strategy focused on enhancing client services, accelerating innovation, and implementing cost-saving measures.
Recently, Hargreaves Lansdown reported its earnings for the year ending June, showing a 4% increase in underlying profit before tax to £456 million and a 4% rise in revenue to £764.9 million. However, net new business inflows decreased by 13% to £4.2 billion.
Jefferies analysts noted that the results were slightly better than expected and anticipate that the takeover bid will proceed. They highlighted that the consortium’s offer of 1,110 pence per share plus a 30 pence dividend has been recommended by the board and will likely receive support from major shareholders, including the founders.
“Although the offer is a 54% premium to the pre-offer share price, we think there is greater value in HL in the medium term. Nevertheless, we expect the offer to succeed.”
Hargreaves Lansdown Chair Alison Platt stated that the takeover offer “represents an attractive opportunity for HL Shareholders.”
Representatives from CVC Private Equity Group, Nordic Capital Advisors, and the Abu Dhabi Investment Authority noted that Hargreaves Lansdown “requires substantial investment in an extensive technology-led transformation to improve HL’s proposition and resilience, and to drive the next phase of HL’s growth and development.”
Moreover, “We look forward to partnering with HL’s management to accelerate its transformation plan – including investment in technology infrastructure, digital channels, and service enhancement – all with client value, service, speed of innovation, and HL’s clear purpose at the core,” they stated.
Main author: Katrina Bishop
Source: CNBC
