Hargreaves Lansdown (LON: HL) has rejected a £4.6 billion takeover bid brought by a consortium led by the private equity giant CVC Capital and Abu Dhabi’s sovereign wealth fund. The consortium offered 85 pence per Hargreaves Lansdown share on 26 April 2024.

An “Undervalued” Offer

Yesterday (Wednesday), Hargreaves Lansdown’s board announced that it had “unanimously rejected” the buyout proposal as it “substantially undervalued [the company] and its future prospects.”

Under the existing rule, the consortium must “either announce a firm intention to make an offer for Hargreaves Lansdown… or announce that it does not intend to make an offer for Hargreaves Lansdown” by 5 pm on 19 June 2024. However, the deadline can be extended with the agreement of Hargreaves Lansdown and the Takeover Panel.

The consortium included private equity firms Nordic Capital and Platinum Ivy, a wholly-owned subsidiary of Abu Dhabi Investment Authority, in addition to the two giants. Nordic Capital also confirmed that the consortium is “considering a possible offer,” while at the same time, Hargreaves Lansdown’s board advised the shareholders “to take no action.”

However, both Nordic and Hargreaves highlighted that “there can be no certainty that any firm offer will be made.”

Strong Financials

Hargreaves Lansdown is a publicly listed financial services company that sells funds, shares, and other investment products to retail investors in the United Kingdom. In the first quarter of 2024, the firm achieved revenue of £199.7 million, the highest over the past year, surpassing results from Q4 2023 at £184.4 million and from Q1 2023 at £188.1 million, Finance Magnates reported earlier.

The company’s monthly share dealing volumes also increased, reaching 794,000 compared to 672,000 in the previous quarter and 770,000 reported in the same period the previous year. Further, it added 34,000 net new clients in the three months, an increase of 48 percent compared to the corresponding period last year, taking the total number of active clients to 1,858,000.