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THG’s shares jumped more than 40 per cent on Monday after the ecommerce retailer revealed it had received a takeover bid from Apollo.
The company, formerly known as The Hut Group and which owns websites Lookfantastic and Myprotein, did not disclose the terms of the preliminary proposal and made no further comment.
Apollo must make its intentions clear by May 15 or walk away, THG said in a statement. The announcement pushed the shares up 44 per cent to 95p, valuing the company at £1.2bn, a day before it posts annual results.
It comes following months of speculation about the group’s future as a listed company after it floated with great fanfare in London in 2020 at an opening valuation of about £5.4bn — the largest IPO in the country since 2017.
However, co-founder and chief executive Matthew Moulding, a prolific social media user, said this month that he “wouldn’t recommend” listing on the London Stock Exchange.
“The way we’ve been treated since joining the LSE has done nothing but add fuel to our insatiable fighting spirit,” he wrote on Instagram. “It’s certainly not an experience I’d recommend to anyone, but it’s been a decent test of our start-up mentality.”
He previously said he would give up his “golden share” in the business to allay concerns about corporate governance, but he has yet to do so. This gives the entrepreneur, who still owns about 25 per cent of the company, the power to veto any takeover deals.
The Manchester-based group in January warned on profits for the fourth time within a year. It has had to contend with speculation about the profitability of its Ingenuity division, which helps other companies to sell online, and higher commodity prices for its protein shakes. Last year, SoftBank also scrapped a deal that would have led to the Japanese group buying a $1.6bn stake in Ingenuity.
THG has previously been subject to takeover interest from a range of investors, including property tycoon Nick Candy and THG non-executive director Iain McDonald, seeking to take advantage of a share price that has plunged over the past 18 months. A year ago THG rejected a bid from investors Belerion Capital and King Street Capital Management that valued the company at £2bn.
The retailer has also come under pressure from activist investors such as Kelso, which has bought a stake and sees the current share price as trading at a discount. In particular, Kelso has argued that THG’s nutrition business, which includes the Myprotein brand, could alone be worth more than the company’s entire market capitalisation.
Sparta Capital, founded in 2021 by former Elliott Management portfolio manager Franck Tuil, also has a stake in THG.
A person close to Sparta argued that Apollo’s interest in THG wasn’t surprising since the company is significantly undervalued but any offer would have to come with an outsized premium to make sense.
Apollo declined to comment.
The group’s interest in THG is the latest example of private equity groups seeking to take UK companies private.
In the past week, credit card processor, London-listed Network International Holdings and Dechra Pharmaceuticals have announced that they are fielding interest from buyout firms including CVC Capital Partners and EQT. Apollo has also been involved in long-running talks to take energy services business Wood Group private.
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