CVC and ADIA’s Bold Move: £5.4 Billion Bid for Hargreaves Lansdown

CVC and ADIA's Bold Move: £5.4 Billion Bid for Hargreaves Lansdown

A new bid for Hargreaves Lansdown Plc has been launched by a group of private equity purchasers, who value the investment platform at £5.4 billion ($6.9 billion).

In a statement released on Tuesday, Hargreaves Lansdown indicated that its board will overwhelmingly accept the updated offer at the suggested price. The current offer from the consortium, which also includes Platinum Ivy, a division of the national wealth fund Abu Dhabi Investment Authority, Nordic Capital, and CVC Capital Partners, is a continuation of their earlier approaches.

On April 26, the group made its initial proposal to the UK firm’s board presenting a £4.7 billion offer at 985 pence per share. The approach from late April was 30% more than the share price at the time, but by of Monday, they had increased to 1,074 pence, wiping out that premium.

The Bristol-based company, which has more than 1.8 million users and £150 billion in assets under management and administration, is the biggest platform for retail investors in the UK. However, competitors such as Interactive Investor and AJ Bell Plc have begun to gain market share in recent years, partly due to their more affordable costs.

Hargreaves Lansdown founders

In 1981, Stephen Lansdown and Peter Hargreaves co-founded Hargreaves Lansdown. Although they have both sold shares in the company in recent years, they still jointly hold over 25% of it, making them some of the wealthiest individuals in the nation.

In a February earnings call Chief Executive Officer Dan Olley—who assumed the role last year—told analysts he was certain that clients were receiving good value, but he also mentioned that the company was keeping an eye on costs and looking into ways to provide economies of scale.

Nearly 20% of the company is owned by Hargreaves, who criticized the previous management for stifling earnings and the company’s share price.

A little over 6% of the company is owned by Lansdown who earlier this month told the Financial Times that he is far more interested in what the group would do with the company if they were to acquire it than he is in the bid price.

The strategy is the most recent in a line of action that is reshaping the UK financial markets through consolidation. Other examples include the proposed acquisition of Coventry Building Society and the planned acquisition of Virgin Money by Nationwide Building Society.

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