19th Jun 2024 11:22
(Alliance News) - Liberum believes Hargreaves Lansdown PLC will accept a private equity takeover bid, though Shore Capital Markets believes there are more legs in this M&A saga.
The Bristol, England-based wealth management platform confirmed Tuesday it has decided to engage with the consortium, led by CVC Capital Partners, about a revised offer that would incorporate a final dividend worth more than 30 pence per share.
The proposed offer prices the company at 1,140 pence per share, valuing it at GBP5.40 billion. Shares in the company traded 0.4% lower at 1,125.50p each in London on Wednesday morning, giving it a GBP5.34 billion market capitalisation.
Hargreaves Lansdown confirmed it extended a deadline for the consortium to announce its intention to make an offer, which was due to run out on Tuesday afternoon, to July 19.
"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," the company said.
Furthermore, there would be a rollover equity alternative that would provide Hargreaves Lansdown shareholders the opportunity to re-invest their shareholding and co-invest in the consortium's unlisted acquisition vehicle.
Last month, Hargreaves Lansdown rejected a 985p per share offer from a consortium on the grounds that it "substantially undervalued" the company.
Liberum believes the latest tilt is "opportunistic", but does expect it to be accepted.
"The board are likely to recommend the offer and we believe the bid will be accepted given the founders (around 26% combined holding) now have the option to roll their equity into the new acquisition vehicle," Liberum analysts Jon Byrne and James Allen commented.
Shore analyst Vivek Raja, however, is surprised Hargreaves Lansdown is willing to listen to the CVC-led consortium.
"We are disappointed that HL's board is not backing management to execute its plan as the company enters what should be the final stages of a multi-year re-platforming exercise. With its dominant position in the UK direct-to-consumer platform investing market, which will continue to experience secular growth, we see HL as something of a trophy asset. So, the revised offer undervalues HL, and we think this story has further to run," Raja added.
By Eric Cunha, Alliance News news editor
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