Hargreaves Lansdown takeover offer slammed by shareholder

A Hargreaves Lansdown (HL) shareholder has expressed dismay at a £5.4bn takeover offer for the investment platform in an open letter to the company's chair.

Lancaster Investment Management, which has £1.9m shares in HL, said it remained "unconvinced" the consortium's offer was fair to all stakeholders.

Last week the Bristol-headquartered company said it would back an offer being led by private equity firm CVC Capital and Abu Dhabi’s wealth fund.

Lancaster said it questioned the valuation and warned there was a risk of potential conflict of interest in the terms of the current offer.

"We question the fairness of a deal where we expect only a small number of shareholders will be able to remain invested via a private rollover equity alternative, while we expect the majority of shareholders, including Lancaster's Global Equity Funds, will not be able to participate by going private," the letter stated.

The letter, signed by James Hanbury, portfolio manager, and James Spalton, investment analyst, went on to say the firm was "not averse" to private equity offers where there was "a 'win-win' along with public shareholders and other stakeholders".

The current offer would see HL acquired at a price of 1,140p per HL share in cash. It also includes an option for HL shareholders to elect for a rollover equity alternative in respect of some or all of their shares.

"We find it an unfortunate irony that HL, as a champion of open access to financial services, may itself now be close to exiting the public markets without full value offered to public shareholders in our opinion," Lancaster said.

The letter urged the board to give itself more time in its current form to assess HL's strategic options and to assess shareholder support for different outcomes.

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"If management can execute on the strategy as the board and we expect, then in our view there is plenty of growth and upside potential for this private equity consortium or others to come back at a very different price and valuation in the future. We believe that path would create a far better outcome for HL's public shareholders, HL's clients, and indeed British savers.

"We do not take the decision to write this open letter lightly. We very much hope the board will receive it as a constructive effort to voice the concerns of a smaller shareholder, and that it will aid the board's important deliberations regarding HL's future."