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December 23, 2024
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Private Equity

Founders in line for £850m payday as Hargreaves Lansdown goes private as £5.4bn takeover agreed


  • Peter Hargreaves and Stephen Lansdown planning to vote in favour of bid
  • It will see them take home £850m between them
  • Hargreaves will retain 10% stake, while Lansdown plans to sell entire holding 

The City is braced for a fresh wave of takeovers after Hargreaves Lansdown agreed to be taken private in a £5.4billion deal.

The investment platform is just the latest London-listed firm to be snapped up by private equity after a flurry of bids this year.

Analysts have warned that the stock market is a top target for buyout firms on the hunt for ‘cheap prey’ as central banks start to cut interest rates.

Meanwhile, research showed that private equity giants are sitting on more than half a trillion dollars and are ready to invest.

Hargreaves Lansdown directors have accepted an £11.40 per share offer from a consortium of investors including CVC and Abu Dhabi’s sovereign wealth fund.

Windfall: Founders Peter Hargreaves and Stephen Lansdown are planning to vote in favour of the bid

Windfall: Founders Peter Hargreaves and Stephen Lansdown are planning to vote in favour of the bid

The offer is a 54 per cent premium to its closing price of £7.40p on April 11, the day before the consortium initially approached Hargreaves, but still significantly lower than the £20 shares were worth in 2019.

Takeover talks between the company and the private equity group, which also includes Nordic Capital, dragged on for months after the firm rejected an initial £9.85 per share deal. Founders Peter Hargreaves, 77, and Stephen Lansdown, 71, are planning to vote in favour of the bid, which will see them take home £850m between them.

Hargreaves will retain a 10 per cent stake in the firm, while Lansdown plans to sell his entire 6 per cent holding. But it is a further blow to the City as the deal comes just a month after Britvic accepted a £3.3billion approach from beer giant Carlsberg.

That followed cyber-security group Darktrace’s decision to back a £4.6billion takeover by US private equity firm Thoma Bravo.

London’s stock market’s crisis is expected to deepen as falling interest rates mean private equity firms can cheaply borrow money to finance deals. The Bank of England last week cut the base rate by 0.25 per cent and the US Federal Reserve is expected to follow suit when policymakers meet next month.

A cut to borrowing costs could fire the starting gun on another wave of takeover bids, analysts said.

Hargreaves Lansdown is facing legal action from clients who are out of pocket after investing in disgraced stock picker Neil Woodford’s funds through the platform.

The company continued to recommend Woodford’s fund to clients until it collapsed in 2019, despite concerns over its liquidity.

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