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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Hargreaves Lansdown PLC, In the Matter Of [2025] EWHC 655 (Ch) (18 March 2025) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2025/655.html Cite as: [2025] EWHC 655 (Ch)

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IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMPANIES COURT (ChD)

IN THE MATTER OF HARGREAVES LANSDOWN PLC
AND IN THE MATTER OF THE COMPANIES ACT 2006

		Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL
		18/03/2025

This judgment was handed down remotely at 13.00pm on 18 March 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives. ............................. THE HON MR JUSTICE MELLOR

Mr Justice Mellor :

Introduction

1. This is the application of Hargreaves Lansdown Plc ("the Company") seeking sanction of a proposed scheme of arrangement ("the Scheme") pursuant to Part 26 of the Companies Act 2006 ("CA 2006"). The Scheme is proposed between the Company and the holders of its ordinary shares of 0.4 penny each ("the Scheme Shareholders" and the "Scheme Shares" respectively).
2. The Company is the UK's largest savings and investment platform and its biggest retail stockbroker, with almost 1.9 million clients and £155.3 billion of savings and investments. The Company's ordinary shares are admitted to trading on the Main Market for listed securities operated by the London Stock Exchange plc ("the Main Market").
3. The underlying commercial purpose of the Scheme is to enable Harp Bidco Limited ("Bidco") to acquire the entire issued and to be issued share capital of the Company. Bidco is indirectly owned by a consortium of private equity investors ("the Consortium").
4. Other companies within the acquisition group structure include two Jersey companies, Harp Topco Limited ("Topco") and Harp Group Holdings Jersey Limited ("Consortium JVCo"), through which the Consortium indirectly hold their interest in Bidco. Each of Bidco, Topco and Consortium JVCo have been formed for the purposes of the acquisition and have not carried on business other than in taking steps to prepare for the acquisition.
5. Mr Andrew Thornton KC appears for the Company and is also instructed by Bidco to offer conventional undertakings to the Court on behalf of Bidco and other members of the acquisition group structure to be bound by the Scheme.
6. Mr Thornton supplied me with a very useful and clear skeleton argument and the relevant authorities and his solicitors prepared and supplied a bundle containing all the relevant documents. He supplemented his skeleton argument with succinct oral submissions at the hearing.

The Scheme

7. The Scheme is a straightforward transfer scheme between the Company and the Scheme Shareholders. Bidco is to provide the consideration due to the Scheme Shareholders pursuant to the Scheme, hence the need for its undertaking to be bound by the Scheme.
8. The Scheme does not involve any reduction in capital or any other changes to its capital base or underlying business, so the Scheme will not have an adverse impact on the interests of the Company's creditors.
9. For every Scheme Share held at the Scheme Record Time (and transferred to Bidco under the Scheme), a Scheme Shareholder will receive default consideration of 1,110 pence in cash (together with a dividend of 30 pence per share in respect of the financial year ended 30 June 2024). The cash consideration values the Company's entire issued and to be issued share capital at approximately £5,443 million on a fully diluted basis and represented a premium of approximately 54.1 per cent to the undisturbed price of 740 pence at which the Company's shares were trading immediately prior to the initial approach to the Company by the Consortium (11 April 2025)
10. As an alternative to receiving the cash consideration, Scheme Shareholders (subject to conventional restrictions on the receipt of equity consideration in certain restricted jurisdictions) have been offered the option of electing (in respect of all or part only of their holdings of Scheme Shares) to receive rollover loan notes which will, subject to the implementation of the rollover, roll over into B Ordinary Shares in Harp Topco Limited ("Topco"). Full details of the rollover alternative were set out in Part IV of the Scheme documents.
11. The maximum number of rollover securities available to the Scheme Shareholders is 35 per cent of the issued share capital of Topco. If elections are made for too many rollover securities, entitlements will be rounded down on a pro rata basis with the unsatisfied elections paid out in cash.
12. There are outstanding in-the-money options over the Company's shares which will become exercisable early because of the Scheme (to the extent not already exercisable). The impact of the Scheme on those rights is summarised in the first witness statement of Alison Platt and in the scheme document. If rights are exercised prior to the Scheme Record Time, the option-holders will become Scheme Shareholders and participate in the Scheme. To the extent they are exercised after the Scheme Record Time, the holders will receive the same cash consideration as payable pursuant to the Scheme through a new provision inserted into the Company's articles of association.
13. Goldman Sachs International, in its capacity as financial adviser to Bidco, has confirmed that sufficient resources are available to Bidco to satisfy in full the cash consideration due to Scheme Shareholders pursuant to the Scheme.

The Jurisdictional Requirements under Part 26

14. Mr Thornton directed my attention to the jurisdictional requirements and explained how they were satisfied in this case.
15. First, the Scheme involves an arrangement between the Company and the Scheme Shareholders with the necessary element of give and take between them.
16. Second, at the permission to convene stage there were no issues arising requiring the application to be listed before a High Court Judge instead of the ICC Judge.
17. Third, accordingly, at a hearing on 4 September 2024 before ICC Judge Barbour, permission was granted to convene a meeting of the Scheme Shareholders for the purpose of considering and if thought fit, approving the Scheme. In her Order of that date, the Company was granted permission to convene a single physical meeting of the Scheme Shareholders to be held in Bristol. Alison Pratt (who took the chair at the Court Meeting) was identified in the Order as a proposed chair of the Court Meeting.
18. Fourth, since all Scheme Shareholders were being offered the same 'deal' under the terms of Scheme, it was appropriate to call a single meeting of Scheme Shareholders to consider and, if thought fit, approve the Scheme. In her first witness statement, Alison Pratt explained various categories of holdings of shares in the Company and why no class issues arose in relation to any of them. Very briefly, these categories comprised:

i) Certain clients of the Company who had chosen to invest in the Company's shares using the Company's services.

ii) Certain shares held by entities treated in the City Code as 'acting in concert' with Bidco, although Ms Pratt's evidence is clear that all such holdings were held separately from any business involved in or advising on the Scheme.

19. The directors' interests in the Scheme are set out in paragraph 9 of the explanatory statement. The interests of the directors in the share capital of the Company are set out in the Scheme document.
20. Fifth, the Scheme document contains the elements required by Part 26 and a full and proper explanation of the Scheme and its effects on Scheme Shareholders. The witness statements of James Norman Dickson of Toppan Merrill Ltd ('TML') and Lisa Elizabeth Graham of Equiniti Ltd set out the steps taken by the Company to comply with the notice requirements in the order of ICC Judge Barbour. Equiniti are the Company's registrars and TML provided printing, posting and email services to the Company for the purposes of producing and distributing the Scheme document.
21. Sixth, Ms Graham reports that, in relation to those who had elected to receive notification by email of documents published on the Company's website (the paragraph 2.8(b) shareholders'), the email notifications were successfully delivered, save for two bouncebacks. Equiniti subsequently sent a printed copy of the Email Notification to both of the HL Shareholders' registered addresses on 12 September 2024. TML arranged for the HL Shareholders referred to in paragraph 2.8(b) to be sent the Forms of Proxy and Form of Election (if applicable) in hard copy form. The two bouncebacks aside (the effects of which were remedied as described), no difficulties were encountered in distributing the Scheme document to Scheme Shareholders.

The Court Meeting

22. The Chair's report of the Court Meeting shows that the resolution to approve the Scheme received the requisite votes in favour both as to majority in number and majority in value of those shareholders who attended the Court Meeting.
23. No questions were asked by Scheme Shareholders at the Court Meeting.
24. Certain shareholders cast votes both for and against the Scheme. The Chair's report sets out the outcome based on the approach taken in Re Equitable Life Assurance Society (No.1) [2002] BCC 319 and Re Cardtronics plc [2021] EWHC 1617 (Ch) (treating the shareholder as both a member in favour and a member against the Scheme for the purposes of the majority in number test) and the test set out in Re GW Pharmaceutical plc [2021] EWHC 716 (Ch).
25. On the Re Equitable basis, 77 Scheme Shareholders voted in favour of the Scheme, holding 322,548,048 Scheme Shares and 31 Scheme Shareholders voted against the Scheme holding 49,614,672 Scheme Shares. The majority was therefore 71.30 per cent in number representing 86.67 per cent in value. On the GW Pharmaceuticals basis, the majority in number proportion was 70.10 per cent.
26. The turnout at the Court Meeting was 22.35 per cent in number and 78.46 per cent in value.
27. Accordingly, the Court Meeting was held in accordance with the directions of ICC Judge Barber and the Scheme was approved at the Court Meeting on a representative turnout.

The Court's Discretion

28. So far as the Court's discretion to sanction a scheme is concerned, Mr Thornton drew my attention to the well-established guidance set out in Buckley on the Companies Acts at [219] et seq. It is unnecessary to set it out but I have it well in mind. He also reminded me of the four matters set out by Morgan J. in Re TDG plc [2009] 1 BCLC 445 to which the Court is required to direct attention when considering whether to sanction any proposed scheme of arrangement. These are:

i) the court must be satisfied that the provisions of the statute have been complied with;

ii) the court must be satisfied that the class of shareholders, the subject of the court meeting, was fairly represented by those who attended the meeting, and the statutory majority are acting bona fide and not coercing the minority in order to promote interests adverse to those of the class they purport to represent;

iii) an intelligent and honest person, a member of the class concerned and acting in respect of his own interest, might reasonably approve the scheme; and

iv) there must be no blot on the scheme.

29. Addressing those four points in turn.
30. First, I am entirely satisfied that the provisions of the statute have been complied with. The meeting of the Scheme Shareholders was duly convened and held in accordance with the directions of ICC Judge Barbour, an explanatory statement drawn up in accordance with the requirements of Part 26 CA 2006 was sent to Scheme Shareholders and the Scheme Shareholders who attended the Court Meeting (in person or by proxy) approved the Scheme by the requisite statutory majority.
31. Second, I am satisfied that the class of shareholders who were the subject of the Court Meeting was fairly represented by those who attended the meeting, and there is no evidence to suggest that the statutory majority was acting other than bona fide or coercing the minority to promote interests adverse to those of the class.
32. Third, I am satisfied that the Scheme is one that an intelligent and honest person, a member of the class concerned and acting in respect of his own interest, might reasonably approve. In particular, the Scheme:

i) was unanimously recommended by the directors of the Company who had the benefit of advice from the Financial Advisers;

ii) was fully and properly explained to the Scheme Shareholders in the Scheme document;

iii) was approved by the Scheme Shareholders at the Court Meeting; and

iv) provides for the Scheme Shareholders to dispose of their shares for consideration with a value significantly in excess to the price at which they were trading before the announcement of the Scheme.

33. Fourth, I am satisfied that there is no blot on the Scheme.

Other issues

34. As regards other issues, Mr Thorton drew my attention to the following matters.
35. First, Bidco received irrevocable undertakings in support of the increased offer from directors holding approximately 0.02 per cent of the Scheme Shares and from Peter Hargreaves in respect of approximately a further 19.8 per cent of the Scheme Shares. Peter Hargreaves also undertook to elect to receive 50 per cent of his consideration through the Alternative Offer.
36. In addition, Stephen Lansdown provided a non-binding confirmation of intent to vote in favour of the Scheme (and to elect to receive cash consideration) in respect of his approximately 5.7 per cent shareholding. A full breakdown of the irrevocable undertakings was set out in the scheme document.
37. Second, no additional consideration was provided to the shareholders who provided irrevocable undertakings or a voting confirmation. Accordingly, the irrevocable undertakings and voting confirmation do not give rise to any class issue (see Re Telewest Communications plc (No.1) [2004] EWHC 924 (Ch)) and do not to give rise to any concerns as to discretion in this case.
38. Third, at the hearing Counsel for the Company confirmed that all outstanding conditions have been satisfied or waived by Bidco (save for those within the control of the Court).
39. Fourth, Bidco and other members of its group propose to rely on the exemption contained in section 3(A)(10) of the United States Securities Act of 1933 (as amended) to obviate the need to comply with the registration requirements of that statute in respect of any securities to be issued in connection with the share alternative.
40. Fifth, none of the Company, any member of the Bidco group or their respective advisers have received notice of any objections to the Scheme or of any stakeholder in the Company proposing to attend the sanction hearing.
41. Sixth the length of time which has elapsed between the Court meeting and this sanction hearing is explained by the need to obtain necessary clearances or approvals from various competition authorities around the world.
42. Finally, Counsel gave the undertakings as set out in the draft Order to the Court (and as also set out in Recital F to the Scheme) on behalf of Bidco and its related parties.

Decision

43. For all these reasons (as set out in this Judgment) at the conclusion of the hearing I announced I was sanctioning the Scheme.