Hargreaves Lansdown rejects takeover offer from CVC-backed consortium

23rd May 2024 07:18

(Sharecast News) - Hargreaves Lansdown confirmed on Thursday that it had rejected a 985p per share takeover offer from a consortium comprising of CVC, Nordic Capital and Platinum Ivy, which is a wholly-owned subsidiary of Abu Dhabi Investment Authority.

It said: "The board confirms that it unanimously rejected the proposal on the basis it substantially undervalues Hargreaves Lansdown and its future prospects.

"The board is focused on executing its strategy and looks forward to updating the market at the full year results on 9th August 2024. In the meantime, shareholders are advised to take no action."

At 1008 BST, the shares were up 11.2% at 1,088.92p.

Shore Capital analyst Vivek Raja said: "The offer reflects HL's lowly valuation, in our view. Though the stock has rallied meaningfully from a trough at less than 700p in March, a 12-month forward PE of circa 15x and dividend yield more than 4% is low by HL's historical context.

"HL's extensive and, in our view, sticky client base straddling c.40% of the UK D2C platform investing market is valuable. Whilst the company's rate of adding new clients has slowed in the past few years, long-term growth prospects are underpinned by UK wealth formation and the need to save, the shift towards self-directed investing, and the shift of assets from non-platform schemes to investment platforms.

"The earnings HL produces are high quality, offering good cash flow visibility, which we imagine would be part of the consortium's attraction."