Shares of UK online brokerage firm Hargreaves Lansdown plc (LON:HL) traded up sharply on Tuesday, after an increased offer to buy the company emerged ahead of a Wednesday deadline.
The original offer for Hargreaves of 985p per share made in late May by a consortium of private equity suitors including CVC Capital, Nordic Capital, and the Abu Dhabi Investment Authority (or ADIA, via its Platinum Ivy unit) was upped by the group by 16%, to 1140p, valuing Hargreaves at £5.4 billion. Interestingly, the “new” price was almost identical to the closing price of Hargreaves shares on the day the original offer was made (1120p), as traders speculated at the time that the initial offer – immediately rejected at the time by Hargreaves’ board – was not going to be the last one.
This time, the board noted that it has “decided to engage” with the consortium, and provide confirmatory due diligence access to the prospective buyers. Effectively, the board has said it will accept the consortium’s improved offer for Hargreaves, but has left the door open in case another buyer emerges in the coming weeks, at a higher price point.
In response, as noted above, after starting Tuesday somewhat lower on concerns that no new offer would emerge, Hargreaves shares traded up by 5% closing the day at 1130p – just shy of the 1140p improved offer price. That would seem to indicate that traders now think that this indeed will be the final acquisition price for Hargreaves.
Wild trading on Tuesday June 18 in shares of Hargreaves Lansdown (LON:HL). Source: Google Finance.
