Hargreaves Lansdown investor questions fairness of takeover bid

Hargreaves Lansdown shareholder Lancaster Investment Management said on Monday that it remains "unconvinced" that a takeover offer by a consortium led by CVC Capital Partners is fair for all shareholders.

The investment platform announced last week that it would be willing to recommend a firm takeover approach at 1,140p from the consortium, which comprises Nordic Capital and Platinum Ivy - a wholly-owned subsidiary of Abu Dhabi Investment Authority.

The latest proposal was up from an earlier 985p a share, which was rejected on the basis that it substantially undervalued the group and its future prospects.

HL said last week that 30p of the new 1,140p offer comprises a FY2024 dividend, with an option for the company’s shareholders to elect for a rollover equity alternative in respect of some or all of their shares.

But in an open letter to chair Alison Platt, Lancaster questioned the valuation of the offer, the board’s assessment of HL's weak historic operating performance against its potential for strong future growth and the risk of potential conflict of interest in the terms of the current offer.

"We question the fairness of a deal where we expect only a small number of shareholders will be able to remain invested via a private ‘rollover equity alternative’, while we expect the majority of shareholders, including Lancaster's Global Equity Funds, will not be able to participate by going private," it said.

Lancaster urged the board of Hargreaves Lansdown to give itself more time in its current form to assess strategic options and to assess broad shareholder support for different outcomes.

"If management can execute on strategy as the board and we expect, then in our view there is plenty of growth and upside potential for this private equity consortium or others to come back at a very different price and valuation in the future," it said.

"We believe that path would create a far better outcome for HL's public shareholders, HL's clients, and indeed British savers."