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In a significant move in the financial sector, UK-based investment firm Hargreaves Lansdown has confirmed it has accepted a £5.4 billion ($6.9 billion) buyout offer from a consortium led by CVC Group. The deal, announced Friday by its Bristol headquarters, also involves stakes in Abu Dhabi’s sovereign wealth fund and Nordic Capital, marking the proposal as final.
Under the terms of the deal, Hargreaves Lansdown shareholders will receive 1,110p per share plus a further 30p per share as a dividend. Following the announcement, the company’s shares rose 2.2% in morning trading.
The development comes after an earlier £4.7bn offer from the same consortium was rejected in May, as Hargreaves Lansdown deemed it significantly undervalued for the company and its future prospects. The new offer, a substantial 54% premium to the share price prior to the initial offering, has been well received in the market.
The investment platform, which is the UK’s largest stockbroker and competes with the likes of Interactive Investor and AJ Bell, has faced numerous challenges, including regulatory changes, increased competition and variable interest rates. In response to these challenges, Hargreaves Lansdown has unveiled a strategic review in September 2023 focused on customer engagement, accelerating innovation and cost efficiency.
Financial performance for the year ended June showed a 4% increase in both underlying pretax earnings and revenue, although there was a 13% decline in net new business inflows. Jefferies analysts considered these results slightly above expectations and expect the takeover offer to be accepted.
The deal is strongly supported by the company’s board of directors and key shareholders, including its founders. Despite the substantial premium offered, analysts believe the company is more valuable in the medium term, but still expect the acquisition to be a success.
Chairwoman Alison Platt noted that the acquisition is a profitable prospect for shareholders, highlighting the transformational investment planned for Hargreaves Lansdown, particularly in technological advances and customer service improvements. Representatives of the consortium of CVC, Nordic Capital and Abu Dhabi Investment Authority look forward to executing these strategic improvements, aiming to strengthen Hargreaves Lansdown’s market position and growth trajectory.
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