On the acquisition trail, interactive investor snares Shares for £62m

interactive investor has announced that it is buy Shares, owner of The Share Centre, in a cash and shares deal worth around £61.9m; the company’s stock surged by 17% this morning on news of the offer.

ii has made no secret of its ambitions to grow by acquisition, and in announcing the deal, it said retail investment platforms need scale to sustain the levels of profit needed for significant technological investment; this gave the acquisition a strong strategic rationale, and scale certainly seems vital if retail brokers are to see off the challenge of disruptors such as Robinhood, Freetrade and Revolut.

This deal has been long in the making; in May 2019 the companies confirmed they were in early stage discussions but the investment platform later decided against launching a bid.

Richard Wilson, chief executive of ii, said he was ‘delighted’ with the deal announced today.

‘further scale and the opportunity to deliver enhanced value, service and customer experience to an enlarged customer base’

‘Combining our individual strengths brings further scale and the opportunity to deliver enhanced value, service and customer experience to an enlarged customer base,’ he added.

The terms of the deal mean that Share investors will receive 4.1p in cash and a proportion of a new share of interactive investor’s parent for each Share share they hold.

The price is based on a valuation of £441.62 per new ii share, valuing each Share share at 41p – a 41% premium on Friday’s closing price.

‘I am delighted to welcome this combination of our businesses, designed to transform theprospects for individual share ownership and personal investment across the United Kingdom,’ said Share executive chairman Gavin Oldham.

Oldham said the deal would help achieve Share’s major strategic ambitions to ‘transform’ its business and to work towards ‘a more egalitarian form of capitalism’ in the coming years.

‘We have to grow significantly in order to achieve this, not only in profitability but also in scale and in substance,’ he added. ‘With our prospective new colleagues in ii we have discovered just such a meeting of minds, and a shared purpose for the future’.