Hargreaves Lansdown Plc, Re

The court sanctioned a scheme of arrangement under Part 26 of the Companies Act 2006 to enable the acquisition of Hargreaves Lansdown Plc by Harp Bidco Limited. The judge was satisfied that the statutory and procedural requirements for a scheme had been met, that the class of scheme shareholders was properly represented at the court meeting, and that the statutory majorities had acted bona fide.

The court applied the fourfold test derived from Re TDG plc: compliance with the statute, fair representation of the class, that an intelligent and honest member might reasonably approve the scheme, and absence of any blot on the scheme. The court found each limb satisfied on the facts: the scheme documents complied with Part 26; the Court Meeting result met the required majorities in number and value; directors recommended the scheme; the consideration represented a significant premium to the pre-announcement price; no class issues arose from irrevocable undertakings; all outstanding conditions were satisfied or waived (save those for the court); and the purchasers gave conventional undertakings to be bound by the scheme. The scheme was therefore sanctioned.

Background and parties: The applicant was Hargreaves Lansdown Plc (the Company), a UK-listed savings and investment platform. The proposed scheme was a transfer scheme under Part 26 CA 2006 whereby Harp Bidco Limited (Bidco), indirectly owned by a private equity consortium, would acquire the entire issued and to be issued ordinary share capital. Other acquisition vehicles included Harp Topco Limited and Harp Group Holdings Jersey Limited. Counsel for the Company also provided undertakings on behalf of Bidco and related parties.

Nature of the application: The Company applied for the court's sanction of the proposed scheme of arrangement under Part 26 CA 2006 to effect the acquisition by Bidco. The scheme offered default cash consideration of 1,110 pence per share plus a 30 pence dividend, with an elective alternative of rollover loan notes convertible into B ordinary shares in Topco (subject to caps and pro rata scaling).

Procedural posture: Permission to convene a single physical Court Meeting in Bristol was granted by ICC Judge Barbour on 4 September 2024. The Court Meeting was held in accordance with that order and the requisite explanatory statement and scheme documents were sent to shareholders by the registrars and print/post/email services. Turnout and vote figures are recorded in the chair's report.

Issues framed by the court:

• Whether the jurisdictional requirements of Part 26 were satisfied.
• Whether the class of scheme shareholders was properly constituted and fairly represented at the Court Meeting.
• Whether the scheme met the fourfold discretionary test derived from Re TDG plc: statutory compliance; fair representation; whether an intelligent and honest member might reasonably approve; and absence of any blot on the scheme.
• Whether any other matters (irrevocable undertakings, director interests, outstanding conditions, regulatory clearances, alternative rollover, exercisable options, and United States registration exemption) raised issues that should affect sanction.

Court's reasoning and findings: The judge found that: the arrangement involved give and take and the Part 26 requirements were met; the Court Meeting had been properly convened and conducted in accordance with the earlier order; the chair's report showed the scheme was approved by the statutory majorities (majority in number and value), applying authorities including Re Equitable Life Assurance Society (No.1), Re Cardtronics plc and Re GW Pharmaceutical plc for vote-counting approaches; the class was fairly represented and there was no evidence of coercion; directors unanimously recommended the scheme after receiving adviser advice; the consideration represented a material premium to the undisturbed market price; irrevocable undertakings and a voting confirmation did not create a class issue; outstanding conditions had been satisfied or waived by Bidco save for court-controlled matters; Goldman Sachs confirmed sufficient resources to fund the cash consideration; and there were no objections lodged by stakeholders. The delay between the meeting and the sanction hearing was explained by the need for competition clearances. Conventional undertakings were given by Bidco and related parties. Having regard to the statutory requirements and the discretionary factors set out in Re TDG plc, the judge concluded there was no blot on the scheme and sanctioned it.

Wider context noted in the judgment: Not stated in the judgment beyond the particular facts; the judge referred to established authorities and guidance but did not purport to alter them.

The court sanctioned the proposed scheme of arrangement. The sanction was granted because the court was satisfied that the statutory provisions of Part 26 CA 2006 had been complied with, the class was fairly represented at the Court Meeting and the statutory majorities had acted bona fide, an intelligent and honest member might reasonably approve the scheme, there was no blot on the scheme, all relevant practical and procedural steps had been taken (including distribution of documents, vote counting and regulatory clearances) and conventional undertakings were given by Bidco and related parties.

Permission to convene a single physical Court Meeting (to be held in Bristol) was granted by ICC Judge Barbour on 4 September 2024. No further appellate history is stated in the judgment.