Yahoo Finance Sir Terry Leahy loses £30m on Hut Group
Former Tesco boss Sir Terry Leahy has lost £30m on The Hut Group since its stock market debut as shares fell further on Wednesday and analysts slashed their forecasts.
The freefall in THG’s stock price this week alone has left the City grandee nursing a £20.5m paper loss.
Sir Terry, who has been spearheading the private equity takeover of Morrisons, was originally one of the major winners of the former market darling’s £5.4bn float last year. He raked in about £17m straight away as he sold 3.4m shares, and held on to another 13.6m worth £68m at the time.
Although he is not close to THG’s top brass, he is understood to be a believer in the stock despite its recent travails.
The shares closed 2.9pc down at 276p yesterday, after plunging 35pc on Tuesday following an investor meeting.
THG’s price targets were lowered at Goldman Sachs, Liberum and Numis amid concerns that major investor SoftBank is dragging its feet on a transformative deal.
THG boss Matthew Moulding and his co-founder, John Gallemore, sought to use a capital markets day this week to reassure investors following a recent fall in the shares amid disquiet over complicated plans to split the business.
One top-20 THG investor said on Wednsday that there still wasn’t “enough transparency around the profitability of the business and the contribution of its constituent parts” and “how much was organic and how much was M&A”.
The company said it was in the dark over what triggered the share sell-off. Bosses said they had not revealed any new information that might have caused such a major swing in the embattled company’s share price.
Mr Moulding and Mr Gallemore have blamed hedge funds betting against the company for driving down the value of its stock.
The company unveiled an intricate deal with SoftBank in May. THG is to spin off its beauty sales arm after a string of bolt-on acquisitions, leaving the rest of the company focused on its technology operation, Ingenuity, which serves as a platform for other retailers.
THG said that since listing in September 2020 it has consistently delivered results ahead of targets. It also has a “very strong liquidity position” going into a peak trading season, it added.
Meanwhile, THG’s non-executive director Damian Sanders spent just shy of half a million pounds on shares in the firm in the afternoon.
Goldman Sachs lowered its share price target for THG to 700p from 900p, but maintained its “buy” recommendation. Liberum slashed its target to 750p from 1,080p, and reiterated “buy”, while Numis, which has been bearish about the stock, had a price target of 230p, down from 520p in September.
The latter said: “We worry enthusiasm for Ingenuity is likely to wane, while stalling momentum and concerns over the margin structure of the trading businesses offer only limited support.”
The share collapse was a result of the capital markets day “not doing enough to alleviate the concerns in the market”, Liberum’s analyst Wayne Brown wrote in his note. However, he added that the plunge in the shares on Tuesday was “quite surprising” and “unjustified”.
Taxing Morrisons questions: MPs demands clarity on deal
Sir Terry Leahy wrote to a Tory MP this week to offer him assurances that Morrisons will pay tax in the UK.
The letter was in response to queries from Kevin Hollinrake MP, who demanded more clarity over the grocer’s tax affairs under new ownership.
Sir Terry is a senior adviser for Clayton, Dubilier & Rice, the US buyout firm poised to acquire it for £7bn. It plans to control the chain via a company registered in the Cayman Islands. Shareholders will vote on the takeover next week.
