Shares in e-commerce group THG fell over 20% this morning after it revealed it had ended takeover talks with Apollo, citing “inadequate valuations” tabled by the private equity firm.
Last month, the Manchester-based business received a “highly preliminary and non-binding” takeover bid from the US buyout giant. A day later, THG revealed that its annual loss had ballooned to £495.6m.
The company, which owns websites such as Lookfantastic and Myprotein, said today that following a short period of talks, there was “no longer any merit in continuing to engage with Apollo”.
Formerly known as The Hut Group, the value of THG has plunged since its £5.4bn flotation in 2020 due to governance concerns and questions over the value of its Ingenuity e-commerce technology division. News of the original approach by Apollo had pushed THG’s share price up over 40%, valuing it at around £1.2bn.
In its statement this morning, THG said: “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 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 its plunging share price 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.
There has been speculation about the group’s future as a listed company, with Co-Founder and Chief Executive Matthew Moulding saying recently that he “wouldn’t recommend” listing on the London Stock Exchange.
In a brief statement, Apollo said it no longer intended to make an offer for THG. Under takeover rules, it cannot make a fresh approach for six months unless it has the recommendation of the board or there is an offer from a third party.
NAM Implications:
- Given the circumstances, it will be difficult to raise fresh capital…
- …so cutting may be the only way forward.
- Meaning belt-tightening all around.
- And some tolerance from suppliers?
