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Hargreaves Lansdown has agreed to a £5.4bn takeover by a consortium of private equity firms that will take the UK’s largest DIY investment site off the London stock market.
The consortium, which is made up of CVC Capital Partners, Nordic Capital and Abu Dhabi Investment Authority, have agreed to pay £11.40 a share in cash for each Hargreaves Lansdown share.
The price includes a final dividend of 30p for the last financial year. The deal includes an “alternative” option for shareholders who want to stay invested in Hargreaves Lansdown, by allowing them to roll over their stake into the unlisted company.
The FTSE 100 company was founded in 1981 by Peter Hargreaves and Stephen Lansdown, and sells products such as individual pensions directly to customers.
Hargreaves, who owns almost 20 per cent of the company, supports the deal and will sell 50 per cent of his stake while also keeping the rest in the business under its new owners. Lansdown has opted to sell his entire near-6 per cent holding.
The option for shareholders to keep a portion of their stakes under the new owners has drawn criticism because it would exclude investors who are unable to have holdings in unlisted companies.
Hargreaves Lansdown is the latest company to delist from the London market, adding to a stream of businesses picked off by private equity firms and other acquirers that view UK companies as relatively cheap.
The board “believes that the cash offer represents an attractive opportunity for HL Shareholders . . . which may not be achievable until the execution of the strategy is delivered over the medium to longer term”, said Alison Platt, chair of Hargreaves Lansdown.
Shares in the company have fallen back from a peak of £24 in 2019 following criticism over the cost of its technology overhaul under previous management. Under Dan Olley, who became chief executive a year ago, Hargreaves Lansdown has refocused its efforts to improve its technology.
The shares climbed 1.8 per cent to £10.97 in early trading on Friday.
Analysts at Jefferies said although the offer represents a sizeable premium, they believe “there is greater value” in Hargreaves Lansdown over the medium term and expect shareholders to support the deal.
Nordic Capital, a member of the consortium, previously invested in Nordnet, a similar digital investment site. Nordic Capital took the business private in 2016 and then relisted it in 2020.
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