THG sells supplements online through its nutrition business
(Picture: THG plc)The prospect of a takeover battle for e-commerce giant THG sent shares rocketing today after two bidders emerged and the City talked up the potential for further interest.
THG’s value jumped by a quarter this morning, following a statement late last night confirming it had rejected a bid and a separate expression of interest from millionaire property developer Nick Candy.
Candy, who until recently was trying to buy Chelsea FC, said he was “in the very early stages of considering a possible offer” for THG, formerly known as The Hut Group.
Around fifteen minutes later, THG put out its own notice saying it had rejected “a third unsolicited, highly preliminary and indicative non-binding proposal” from e-commerce investment group Belerion Capital Group, which was set up by THG board member Iain McDonald, and $20 billion New York asset manager King Street Capital Management. The pair offered 170p a share, which THG said “significantly undervalued the Company and its future prospects.”
Last month THG, which sells protein shakes and make-up through online brands like MyProtein and Glossybox, said it had rejected “numerous” early stage offers without specifying how many or who was behind them.
The new details sent THG’s stock price rocketing 29.3p, or 25%, to 145.75p today.
Bidders are circling after a huge collapse in THG’s share price since last summer. The company has lost more than three quarters of its value since September amid investor concerns about governance and transparency, and unease over plans to refocus the business on its platform business, Ingenuity.
City analysts think THG will continue to attract takeover interest despite its repeated rejection of advances.
Wayne Brown at Liberum said: “A bidder could take the company private and look to later relist in the US, where such tech companies receive much greater appreciation from investors.
“The three Key THG businesses – Beauty, Nutrition and Ingenuity - combined should generate over £2bn in sales in 2022, and if separated out, would be highly valued strategic assets in their own right which should underpin the valuation. We continue to see potential for some form of corporate activity unless the share price recovers meaningfully.”
THG CEO Matt Moulding has signalled he could be open to a potential take-private bid, saying last year that going public in London has “sucked” and he should have listed the business in New York.
Moulding holds a “golden share” that allows him to block any potential deal, though he has vowed to give it up to address governance concerns.
Roland French, an analyst at Davy, said: “Clearly Moulding remains the architect of any deal structure and terms given his holding and Special Share, which has yet to be relinquished.”
French said the 170p offer was far too “cheap”, suggesting 230p would be more reasonable. That would value THG at £2.8 billion.
The company sold shares at 500p each in its September 2020 IPO, which saw it valued at £5.4 billion on the first day of dealing.
Belerion and King Street Capital were approached for comment.
