Daily Brief - 23 May 2024

Hargreaves Lansdown turns down £4.7 billion offer from CVC and ADIA

Hargreaves Lansdown, the UK’s largest investment platform, has rejected a £4.7 billion bid from a group of private equity buyers, including an Abu Dhabi sovereign wealth fund.

The board unanimously decided the offer undervalued the company, despite being at a 30% premium. The consortium is still considering a potential offer. Hargreaves Lansdown is focused on its strategy and will update the market in August.

Founders Peter Hargreaves and Stephen Lansdown remain significant shareholders. The company faces growing competition from rivals with lower fees.

UK rate cut expectations shift as inflation data surprises

Top banks like Goldman Sachs, Barclays, and Morgan Stanley now believe a June rate cut from the Bank of England is unlikely due to new inflation data. Goldman Sachs has delayed its rate cut forecast to August, reducing expected cuts for 2024 from three to two.

The Consumer Price Index rose by 2.3% in April, down from 3.2% in March but still above the BoE’s 2% target, largely due to falling household energy tariffs. Strong wage growth further complicates the decision. Barclays also noted that persistent services inflation makes a June rate cut improbable.

This shift could lead to market volatility, particularly in interest rate-sensitive sectors like real estate. The situation highlights ongoing global economic challenges as central banks strive to balance inflation control and economic growth.

Major moves: Mergers, acquisitions, and rejections shape the market

This week has seen significant corporate maneuvers, with Anglo American rejecting a takeover bid from BHP and Biogen acquiring Human Immunology Biosciences for up to $1.8 billion to boost its rare disease portfolio.

Oaktree Capital decided to keep Inter Milan, ADNOC expanded its gas interests by acquiring Galp’s stake in Mozambique, and Admiral Acquisition purchased Acuren for $1.85 billion. Namoi Cotton rejected a bid from Louis Dreyfus, favoring a potential offer from Olam Agri.

Meanwhile, Uruguay blocked Bimbo's acquisition of Pagnifique over competition concerns. These moves highlight strategic positioning and potential market impacts, reflecting broader economic trends and regulatory challenges.