Here’s why the St. James Place share price popped
St. James Place (LON: STJ) share price popped by over 4% on Thursday, making it the best-performing company in the FTSE 100 index. It jumped to a high of 490p, higher than the year-to-date low of 388p. Still, despite the jump, the stock remains 68% below its highest point in 2021.
The latest surge happened as investors reacted to the acquisition bid for Hargreaves Lansdown. The investment platform rejected a near £5 billion deal from CVC and Hargreaves Lansdown noting that it severely undervalued it.
Analysts believe that the two companies or other bidders will make a counteroffer at a higher valuation. We recently saw BHP increase its bid for Anglo American to put pressure on the management.
A Hargreaves Lansdown acquisition would be a positive outcome for a company that has been under intense pressure in the past few years. It has even become one of the most shorted companies in the UK.
Therefore, STJ share price jumped because investors anticipate that it could become a buyout target too because of its recent woes. St. James Place, the biggest UK wealth manager with over £179 billion in assets, has been one of the most undervalued companies in London with a market cap of over £2.67 billion.
This crash happened as the company fought numerous battles. It became the first big wealth manager to slash fees as part of FCA’s customer duty rules. It also reported huge refunds that could cost it over £400 million. The most recent results showed that its underlying cash result dropped by 4% in 2023 to £392.4.
Therefore, a potential acquirer would get a well-known wealth manager with opportunities to cut costs. As I wrote before, is also a big franchise with over 958k customers and one that can be turned around.Demand for British companies is rising. This week, EQT, a Swedish company, acquired Keyword Studios, a game studio that provides services to Activision Blizzard and Tencent. Thoma Bravo also bought Darktrace while International Paper acquired DS Smith.
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