Shares surge at Hargreaves Lansdown following £5.4bn offer for business
The share price at Bristol investment fund manager Hargreaves Lansdown surged after it was announced it is ready to accept a £5.4bn offer for the business.
A consortium of private equity investors have been circling the business for several months and a fourth offer for the firm looks like being accepted.
If the move goes ahead it will see one of Bristol’s biggest companies falling into private hands and another of the UK’s biggest companies will leave the FTSE 100 index.
In a stock market filing on Tuesday, the company said that the US private equity firm CVC, Denmark’s Nordic Capital and a subsidiary of the Abu Dhabi Investment Authority (ADIA) had made an offer worth £11.40 a share in cash.
It was the fourth proposed offer in recent months, Hargreaves Lansdown said. The first, which was made public in May, was worth £9.85 a share and valued the business at £4.5bn.
According to reports Peter Hargreaves, co-founder of the firm and the largest shareholder, is likely to back the sale of the firm.
Peter Hargreaves
Co-founders, Peter Hargreaves and Bristol City owner Stephen Lansdown, are still major shareholders in the company with stakes that would be valued at £1.07bn and £308m respectively if they were to sell.
Hargreaves Lansdown’s share price has risen by more than half since the end of February following a difficult number of years.
The increase in the share value has seen the company retake its place in the FTSE100.
The share price was up 5% on Tuesday, hitting £11.30 following the announcement.
The increase made it the biggest riser on the FTSE 100.
The bidders have until 5pm on 19 July to make a firm offer, after the company asked for an extension to the deadline under takeover rules.
If successful, the buyout would add Hargreaves Lansdown to a long list of companies leaving the FTSE 100.
Recent departures include the building materials company CRH, which last year shifted its main stock market listing to the US, and the Anglo-German tourism company Tui.
The firm released a statement on the Stock Market yesterday afternoon,.
It said: “The revised proposal is subject to a number of pre-conditions, including completion of satisfactory due diligence and agreement of definitive transaction documentation.
“This revised proposal follows three previous approaches from the Consortium in recent months.
“The Board remains confident in management’s ability to execute Hargreaves Lansdown’s strategic priorities and in Hargreaves Lansdown’s fundamental longer term prospects.
“However, having evaluated the revised possible cash offer, which would provide the certainty of value in cash to shareholders, the board has decided to engage with the consortium and provide confirmatory due diligence access.
“The board has confirmed to the consortium that the revised possible cash offer is at a value that the board would be willing to recommend unanimously to Hargreaves Lansdown shareholders.
“This announcement has been made without the prior consent of the Consortium.
“As a result, there can be no certainty that any firm offer will be made for Hargreaves Lansdown, nor as to the terms on which any firm offer might be made.
“A further announcement will be made as and when appropriate.”
