THG rejects multiple ‘unacceptable’ takeover bids after share price collapse

·3-min read
THG CEO Matt Moulding (THG)
THG CEO Matt Moulding (THG)

Online shopping giant THG has rejected “numerous” early-stage takeover bids in recent weeks as the company’s under-pressure share price attracts bidders.

THG CEO Matt Moulding today confirmed a string of “indicative proposals” following “significant speculation” in the press. Moulding didn’t specify how many approaches had been made but said each had been rejected at an early stage.

“The Board has received indicative proposals from numerous parties in recent weeks,” he said. “The Board has concluded that each and every proposal to date has been unacceptable, failing to reflect the fair value of the Group, and confirms that THG is not currently in receipt of any approaches.”

Industry blog Betaville reported in February that private equity firms Advent, Leonard Green and Apollo were all running the rule over THG.

A spokesperson declined to comment on who had approached the company.

Bidders have been attracted by THG’s declining share price, which has dropped 85% since last summer on concerns about corporate governance and plans to focus on the company’s small but fast-growing tech platform Ingenuity.

“The extent of the share price decline is excessive and still leaves potential for some form of corporate activity,” Liberum analyst Wayne Brown said.

THG is currently valued at just under £1.5 billion by the market, compared to the £5.4 billion price tag it commanded when it listed in September 2020. It comes despite efforts by the company to beef up corporate governance and improve transparency around Ingenunity.

Analysts at Jefferies said bid interest reflected the fact that the valuation was “divorced from fundamental prospects.”

Moulding himself has hinted at the possibility of taking THG private again, saying life on the public market has “just sucked from start to finish.”

He said today: “We continue to focus on delivering our exciting growth strategy across a number of large global sectors, and prepare to step up to the premium segment of the LSE at the appropriate time.”

Confirmation of takeover interest came as THG posted strong sales numbers for the year just gone and defied fears of a slowdown in recent months.

Sales at the company, which sells health and beauty products through brands like MyProtein and Lookfantastic, grew 35% in 2021 to hit £2.1 billion. Operating losses reduced from £481 million to £137 million.

In the first quarter of this year, revenue was up 16% to £520 million, beating forecasts and fears of a slowdown prompted a cost-of-living squeeze.

The company maintained its growth forecasts for the rest of the year but said profits would be squeezed by rising costs. THG will absorb some of those price rises as it seeks to hang on to customers and win market share. Earnings will now be flat on last year, with Jefferies cutting its estimates by £15 million to £160 million.

Independent retail analyst Nick Bubb said THG had “defied the bears” by keeping its sales growth targets unchanged.

Shares rose 2.2p to 97.1p