Challenger bank Aldermore recommends £1.1bn takeover offer from FirstRand

by

Aldermore's chief executive Phillip Monks said the FirstRand takeover would help Aldermore grow

After a month that has seen its share price rocket, Aldermore finally announced this morning that it would recommend a takeover offer from South Africa's FirstRand valuing the business at £1.1bn.

FirstRand, which with a £15.8bn market value is South Africa's largest financial services institution, announced in October that it had made an approach to acquire UK-based lender Aldermore.

It today confirmed that its board and Aldermore's had agreed on the final terms of that offer, at a price of 313p per share.

Read more:  Challenger bank Aldermore on the lookout for M&A as rumours of industry consolidation swirl (but it's not interested in Co-op Bank)

“Ongoing delivery against our strategic and financial targets extends our track record of performance and provides us with continued confidence in our future prospects,” said Aldermore's chief executive Phillip Monks.

“Both of these factors have been reflected in the offer received from FirstRand, which the board is recommending to shareholders.

With the backing of their considerable resources and wider capabilities, we will be able to accelerate the delivery of our strategy and further expand the products and services we offer our customers.

AnaCap Financial Partners, the private equity firm which has supported the challenger bank since inception and is still a substantial shareholder, has already announced its support for the deal.

The firm initially owned Base Commercial Mortgages, a UK small and medium-sized enterprise mortgage lender, and created Aldermore in 2009 when it acquired Ruffler Bank and merged the two businesses.

Read more: Au revoir: Barclays completes sale of French retail banks to private equity firm AnaCap Financial Partners

In a seeming reference to Brexit, FirstRand's chief executive Johan Burger appeared to back the UK's durability.

"In making this offer FirstRand carefully considered how current and potential macroeconomic future scenarios in the UK could impact the broader business," he said.

"We are very comfortable that the financial impact of this transaction is supportive of FirstRand's previous guidance to shareholders on growth, returns, capital position and dividend policy."

Since the news of FirstRand's approach, Aldermore's share price has shot up from 245.9p to trade consistently at more than 300p. In early morning trading, shares were up another 2.45 per cent to 309.8p.

Read more:  Brexit schmexit: Aldermore reports profit boost despite EU vote uncertainty