British investment platform Hargreaves Lansdown has today agreed to a £5.44 billion takeover by an international consortium, which is betting on grabbing market share in the increasingly competitive UK wealth market.
The deal is the second largest by value struck this year by a London-listed company and is the latest in a string of takeovers of British companies.
It has the backing of co-founders and top shareholders Peter Hargreaves and Stephen Lansdown, who founded the company in 1981 and listed it in London in 2007.
The consortium, consisting of Europe's largest private equity firm CVC Capital Partners, Abu Dhabi's sovereign wealth fund and Swedish private equity firm Nordic Capital, said the £11.40 per share cash offer was final.
Shares in FTSE 100-listed Hargreaves Lansdown rose 2% to 11.02 pounds in early trade. As of yesterday's close, they had gained about 10% since the takeover approach was made public in May.
Co-founder Hargreaves plans to re-invest half of his 19.8% stake in the private company and will bank the remaining £535m, according to Reuters calculations. Lansdown stands to make £309m.
Britain's wealth market has seen competition intensify in recent years, with international financial groups muscling into the market and increased focus on wealth management by some UK retail banks, insurers and asset managers.
US investment giant Vanguard, for example, has been expanding its UK Personal Investor platform, and US retail trading platform Robinhood launched in Britain in March.
Plans by the buyers to invest in Hargreaves Lansdown's technology platform, along with any price cuts, could improve its competitive position, RBC analysts said in a note, while adding it was unclear how the investment would be funded.
Investors in Hargreaves Lansdown are being offered an alternative to the cash offer, with the option to rollover their shares into a stake in the private company.
Hargreaves Lansdown, which had rejected a 985 pence per share proposal from the consortium in May, also reported annual adjusted pretax profit of £456m today, beating analysts' average estimate of £428m, according to LSEG data.
Net new business was down 13% year-on-year at £4.2 billion.
Hargreaves Lansdown has seen its shares slide in recent years as British asset managers suffered outflows, with some customers turning to low-cost index-tracking rivals.
