Hargreaves Lansdown has rejected a £4.6bn bid from a consortium led by Abu Dhabi’s wealth fund and the private equity giant CVC Capital.
The fund supermarket, which has nearly 2m customers, has rebuffed two proposals from the investor group, saying they “substantially undervalue” the FTSE 250 business.
The Gulf state’s sovereign wealth fund Abu Dhabi Investment Authority (Adia) has joined forces with Six Nations owner CVC Capital and Nordic Capital to mount the surprise offer.
Hargreaves’ board rejected a 985p per share bid on April 26, according to the consortium. The group said it was considering another approach for the company and has until June 19 to make a firm bid or walk away.
The board of Hargreaves said it was “focused on executing its strategy”.
The consortium has struck during a time of upheaval for Hargreaves, with new chair Alison Platt only having taken the reins in February. Chief executive Dan Olley has been in place for 18 months.
Hargreaves shares were trading around 785p at the time of the first bid, making the offer a 25pc premium.
Since then shares have glided up and were trading just below the initial offer price on Wednesday night.
The consortium and Hargreaves were bounced into a statement after a report on financial deals website Betaville prompted a big move in the share price.
A deal would trigger the takeover of one of the country’s best known investment platforms, which has 1.8 million customers and £150bn of assets, at a time when faith in the London stock market is declining.
The company was founded 40 years ago in Bristol by entrepreneurs Peter Hargreaves and Stephen Lansdown during the post-Thatcher boom in retail share trading.
Mr Lansdown, the majority owner of football team Bristol City FC, and Mr Hargreaves remain significant shareholders and are likely to be pivotal figures in any possible deal.
Hargreaves employs over 2,000 people at its headquarters in Bristol.
The company was a darling of the stock market for many years but the collapse of Neil Woodford’s fund management empire, which Hargreaves had promoted, and the rise of rival AJ Bell took the shine off its stock.
It was recently relegated from the FTSE 100, although a revival in the share price has put it on the cusp of rejoining the index.
Adia invests the vast financial resources of the Gulf state into overseas investments.
CVC is best known as the owner of Six Nations rugby and previously owned a stake in Formula 1. It recently debuted on the Amsterdam stock market.
CVC and Adia are also both co-investors in UK insurer Domestic & General.
Nordic Capital owns a business called Nordnet, which is a Nordic version of Hargreaves Lansdown.
Fenchurch Advisers is offering defence advice to Hargreaves while Goldman Sachs is working with the consortium on the bid.
Goldman banker Mark Sorrell, son of former WPP chief executive Sir Martin Sorrell, is leading the team.
It marks a busy time for UK M&A at Goldman given the company is also working on the bid situations for Anglo American and Royal Mail’s owner.
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