Yahoo Finance Hargreaves Lansdown shares surge 20pc amid hopes of bidding war
Hargreaves Lansdown’s share price jumped by the most in a decade on Thursday after a surprise takeover offer sparked speculation of a bidding war.
Shares in the FTSE 250 company jumped by nearly a fifth, the biggest one day rise since 2014, after the company rebuffed an initial £4.7bn approach from CVC Capital, Abu Dhabi and Nordic Capital.
Hargreaves Lansdown’s board, led by Alison Platt, rejected the 985p per share offer, saying it undervalued the company.
However, the move prompted market hopes of a higher bid and raised the possibility that another suitor may emerge.
US investment giant Charles Schwab was named as a possible counterbidder, while rival private equity firms and banks were also touted as possible suitors.
Hargreaves Lansdown shares hit a peak of 1,151p yesterday, up from 979p at the open and well above the rejected offer price. The stock closed at 1,120p.
The Abu Dhabi-led consortium has until June 19 to mount a firm offer.
A takeover would hand the fund supermarket’s co-founder, Peter Hargreaves, a near £1bn payday.
Reuters reported that Mr Hargreaves, who owns 19.7pc of the company, was open to taking the company private and had been discussing a deal with investors.
Reached by The Telegraph, Mr Hargreaves declined to comment on the situation, saying only that he was “keeping an eye on it”.
Analysts at Investec said: “We would not be surprised to see this process flush out an alternative buyer, and see significant strategic logic for a large UK financial institution or international competitor like Charles Schwab looking at Hargreaves Lansdown.”
A trade buyer with a large customer base could afford to pay more than a private equity suitor, they said, because of the “significant” sales growth that would arise from combining with Hargreaves Lansdown.
Charles Schwab declined to comment.
The sharp rise in the Hargreaves share price caught short-sellers off guard.
Around 5.1pc of Hargreaves stock, worth around £235m, had been sold short by hedge funds before the bid was revealed.
Short-sellers sell shares in the hope of the price falling and buy them back at a lower price to pocket the difference. When they rise, hedge funds must buy them back at a higher price.
