THG has ended talks about a possible takeover bid by Apollo, saying the private equity company’s offer is an inadequate valuation of the online retail tech company.
THG, formerly known as the Hut Group, said that after a “short period of discussion” to give Apollo the chance to up its offer for the company, its board has unanimously decided to “terminate all discussions”.
“It has become clear to the board, supported by shareholders representing a majority of THG’s issued share capital, that there is no longer any merit in continuing to engage with Apollo,” the company said on Friday. “Consideration and rejection of the indicative proposal has been on a basis consistent with all previous offers for the company, some a matter of public record, which were also rejected based upon inadequate valuations and the nature of those offer structures.”
THG, which owns brands including LookFantastic and MyProtein, has been subject to takeover interest from investors, including the property tycoon Nick Candy, and a bid from Belerion Capital and King Street Capital Management that valued the business at £2 billion.
Shares in the company fell by almost 10 percent as investors, who have wiped out 90 percent of its market value since THG listed in London in September 2020, reacted to the latest failure to strike a takeover deal.
“The misery around THG goes on,” said investment director at AJ Bell, Russ Mould. “Investors hoping a takeover would put both them and the company’s torrid existence as a public entity out of their misery will be disappointed.”
The company, co-founded in 2004 by Matt Moulding and fellow former Phones4u executive John Gallemore, became an investor favourite after floating in London at an opening valuation of £5.4 billion.
The valuation has since fallen to £1 billion as THG continues to underperform, with pre-tax losses tripling to £550 million in the year to March 31.
Since publication of the annual results last month, which prompted jittery investors to wipe a fifth off the value of THG, Moulding published an online rant in which he quoted a 1990s track by the singer Alanis Morissette and claimed that it was “standard practice” for hedge funds, analysts and the media to “build negative coverage” against listed companies to drive down their share price.
“THG’s board, in accordance with its fiduciary obligations and as demonstrated with its recent engagement with Apollo, will always give due consideration to all potential options which provide the opportunity to maximise value to THG’s shareholders,” said the chair of THG Charles Allen, on Friday.
“The board remains fully confident in THG’s strategic direction and long-term prospects as an independent company.”
Last month, the activist investor Kelso Group upped its stake in THG and called on the company to consider spinning off its MyProtein nutrition business.
By Mark Sweney
THG Shares Soar After Retailer Confirms Apollo Takeover Bid
THG Plc shares soared as much as 47 percent after the embattled UK online retailer said it received a non-binding acquisition proposal from Apollo Global Management Inc.