As I write, the Hargreaves Lansdown (LSE: HL.) share price is up 2.2% in morning (9 August) trading following the news it has agreed to be taken over by a private equity consortium. The group consists of CVC, Nordic Capital, and ADIA, Abu Dhabi’s sovereign wealth fund.
The stock’s been in fine form this year, rising 54.5% year to date and 37.3% over the last six months. So after hearing the news, some investors may be wondering if Hargreaves is a stock to consider buying. That’s what I’m here to answer.
Details of the deal
Before I do, let’s take a closer look at the details of the deal. As mentioned, the takeover values the firm at £5.4bn. That works out to a price of 1,140p per share, including 30 pence for its final dividend of 2024.
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The price represents a 54.1% premium to the stock’s close on 11 April. That was the last day before the group’s initial approach to takeover the company.
The business is unanimously recommending shareholders support the takeover offer. In a release, Dan Olley, CEO of Hargreaves, said the business had “been reassured during process that the consortium are aligned with our mission”.
The consortium also released a statement, saying how Hargreaves “requires substantial investment in an extensive technology-led transformation to improve HL’s proposition and resilience, and to drive the next phase of HL’s growth and development”.
The firm was co-founded back in 1981 by Peter Hargreaves and Stephen Lansdown. Both have agreed to vote for the deal.
Half-year update
Alongside the takeover announcement, we also got its half-year results. The update had both positive and negative aspects.
Overall, Hargreaves saw net new business of £4.2bn, down from £4.8bn a year earlier. Despite that, it posted revenue of £764.9m, up 4% from the £735.1m recorded in the first half of 2023.
As such, assets under management rose 16% to £155.4bn. The business said this was “driven by net new business and positive market movement”.
The firm now has just over 1.8m active clients and saw a 78,000 increase year over year. That said, profit before tax did fall 2% to £396.3m.
What next?
But where does that leave us potential investors? Well, its share price performance lately has been impressive. But driving that has been takeover talks. And while Hargreaves has many components I look for when investing in a business, such as strong brand recognition and a large customer base, I won’t be buying the stock today.
That’s because its share price has jumped to over 1,100p, just below the agreed takeover price.
As such, I’ll be steering well clear of picking up Hargreaves Lansdown shares any time soon. There’s little point in me buying the stock at the current price.
Regardless, I’ll keep hunting the FTSE 100 for my next bargain. I’m keen to gain more exposure to the financial services sector and see plenty of potential buying opportunities out there.
