Hargreaves Lansdown Co-Founder Questions Takeover Bid Valuation

Stephen Lansdown, co-founder of Hargreaves Lansdown, has expressed doubts about the £5.4 billion bid for the leading UK DIY investment platform, deeming the price of £11.10 per share as “questionable” and indicating it is “not the greatest deal in the world.”

Despite his criticisms, Lansdown acknowledged that the offer is “fair” and anticipates that taking the company private will allow it to concentrate on growth away from market scrutiny.

Lansdown’s remarks come during a time of speculative discussion regarding potential competitive offers for the firm. The proposed deal is set to be voted on by shareholders this autumn, with some analysts arguing the valuation may be too low.

On August 9, the Hargreaves Lansdown board endorsed the private equity consortium’s offer, which includes CVC, Nordic Capital, and the Abu Dhabi Investment Authority, after initially dismissing their earlier proposals.

As a result of his acceptance of the deal regarding his remaining 5.7% stake in the company, Lansdown stands to gain £309 million.

Lansdown stated to The Times, “I think the board did the right thing in rejecting it initially. They got the price up. Whether that price is the right price is questionable but it’s a fair price compared to what it was.”

The final bid represents a 54% increase over Hargreaves Lansdown’s share price before the consortium’s first approach in April, aiming to provide shareholders with “an immediate and certain” value for their assets, according to the company.

“For me, personally, it’s a good time to step back considering my other commitments,” said Lansdown, who is also involved in running Bristol City Football Club, indicating intentions to sell his stake there as well.

He remarked, “While this isn’t the best deal out there, it allows the company to enter a new chapter of growth and development.”

Lansdown further noted, “The acquisition is expected to bring stability, allowing the company freedom from the pressures of being publicly traded, giving it the ability to make strategic decisions without constant public accountability.”

Although several major shareholders, including Lansdown, have committed to accepting the offer, these agreements could change if a competing bid arises that the board finds compelling.

The agreement will proceed through a court-approved scheme of arrangement, with initial documentation expected by September 9. Following that, it will require a shareholder vote, approval from the Financial Conduct Authority, and court validation.

Lansdown summarized his feelings about the deal: “Overall, I’m satisfied. Am I exceptionally happy? Probably not. But it’s beneficial for the company.”

As the largest DIY investment platform in the UK, Hargreaves Lansdown boasts 1.88 million active customers, far outpacing competitors like A J Bell and Abrdn’s Interactive Investor. The company reported a slight decline in pre-tax profits, totaling £396.3 million for the fiscal year ending in June.

Reflecting on his departure from the business in 2012, Lansdown expressed disappointment with the company’s recent trajectory. “It’s undeniable that in the last five or ten years, the company has struggled, growing only at a minimal rate,” he stated.

Lansdown continued, “The board made some subpar decisions, and there has been a change in leadership which we believe is positive, especially with the departure of former chair Deanna Oppenheimer and CEO Chris Hill.”

After an extensive tenure, he admitted to feeling emotional about relinquishing his final stake in the company, saying, “It’s been a part of my life for a long time. I’ve dedicated significant effort, and there are many friends within the company. Naturally, it’s tough to let go.”

On the stock market, Hargreaves Lansdown shares closed unchanged on Tuesday at £11.02, just below the proposed bid price, indicating market skepticism regarding potential rival offers. Analysts from Jefferies, Investec, and Shore Capital have suggested that the current bid fails to accurately reflect the company’s true value.

When asked if he still intends to sell Bristol City, Lansdown replied, “Yes, we are. It’s similar to Hargreaves Lansdown—help is needed to ensure the business thrives. I recognize that I’m not getting any younger, and further investment is necessary.”

Hargreaves Lansdown has opted not to comment further at this time.

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