Under the deal terms, Share investors will receive 41p in a combination of cash and stock for each share they hold – a 41% premium to the firm’s closing price of 29p last Friday.
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In a statement, Share said there was a “strong strategic rationale” for the combination, as consumer share trading platforms required “scale to sustain the level of profitability necessary for significant and ongoing technology investment in customer experience and services”.
The company also said its board will be recommending the offer to shareholders unanimously at a general meeting to approve the takeover.
Share has already received backing from investors representing 70.2% of its share capital, with the merger now expected to complete in the third quarter of 2020.
“I am delighted to welcome this combination of our businesses, designed to transform the prospects for individual share ownership and personal investment across the United Kingdom”, said Share’s executive chairman Gavin Oldham.
Meanwhile, Interactive Investor chief executive Richard Wilson said the combination “brings further scale and the opportunity to deliver enhanced value, service and customer experience to an enlarged customer base”.
Share plc stock was 13.8% higher at 33p in afternoon trading, albeit 24% below Interactive’s offer price.
Consistent with ii’s growth strategy
Andrew Boyle, CEO of corporate finance firm LGB & Co said: “Interactive Investor’s decision to purchase The Share Centre is consistent with the company’s growth strategy, which was illustrated by its acquisition of Alliance Trust Savings in 2019, creating a platform with assets under administration of £36 billion and a customer base of 400,000.”
He added: “In this sector, scale is necessary to offset increasing costs of technology, marketing and regulation. The acquisition of The Share Centre will add a further £5bn in assets and around 275,000 customer accounts to the ii portfolio, as well as bring 250 employees who have developed the company’s reputation for reliable customer service.”
Boyle continued: “The deal values Share plc at a 41% premium to the last closing price of 29p. However, as 90% of the consideration comes in shares of an unquoted vehicle, the share price is up by just 14% to 33p today.
“We may be seeing investors requiring liquidity exiting at this point. However, JC Flowers, who are the majority owner of ii, have a longstanding reputation for expertise in financial sector private equity investing and so the acquisition may be an attractive proposition for investors able to take a longer-term view.”
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