Hargreaves Lansdown is fending off a low-ball takeover

UK Stockbroker Hargreaves Lansdown is fighting off takeover interest on multiple sides after an apparent low-ball offer put the firm ‘in play’.

Hargreaves on Thursday revealed it had batted away two private equity bids, also backed by Abu Dhabi’s sovereign wealth fund, with the most recent pitched at 985p, or £4.7 billion, which marked a very slender premium (less than 1%) to the broker’s market value.

It was resoundingly dismissed across the City as “too cheap”, albeit some market commentators note it was potentially just an opening ‘placeholder’ offer, designed to start a negotiation.

Indeed, the broker’s founder and largest shareholder Peter Hargreaves, who owns just shy of 20%, is reportedly open to supporting such a take-private deal, only at a higher valuation.

How much higher? … well, listening to the market commentators, “significantly higher”.

“Hargreaves’ board has, quite rightly, rejected the most recent offer from a private equity consortium of 985p per share,” Panmure Gordon analyst Rae Maile said in a note.

“Our own view is that the company is worth 1,500p (per share).

“A premium to that should be demanded by shareholders to give up the opportunity to remain exposed to the market leader in a growing market.”

A driver of a recent spate of consolidation in the wealth management sector, according to Panmure, is a desire to position for an anticipated cyclical recovery in the UK market.

At current levels, most wealth managers are valued too cheaply following a tough couple of years.

The analyst highlighted that ratings have fallen too far and the opportunity set has increased, and, multiple firms are now “trading at levels which do not reflect their intrinsic value”.