THG Boss Says IPO Sucked As He Bats Off “Unacceptable” Offers

THG boss and founder Matthew Moulding – dubbed the ‘buff billionaire’ for his rags-to-riches story and gym bunny physique – wishes he had never taken his company public.

After last year telling a conference that he should not have listed in London for a $7.7 billion IPO back in September 2020, and that the experience “has just sucked from start to finish”, the fact that this week he has been batting off takeover rumours is unlikely to have softened his mood.

Indeed, while Manchester-based THG runs highly successful beauty and nutrition websites including Lookfantastic, Cult Beauty and Myprotein, both THG and Moulding have rarely been out of the headlines, the latest this week forcing Moulding to dismiss “numerous” takeover approaches as “unacceptable”, saying they undervalued the company at a time when he would much rather be talking about robust trading.

The company has confirmed that while there had been interest from third parties, the company was not currently involved in any talks, but the real question is where now for THG and its toned titan?

From Backroom to Billionaire

It all started in 2004 when the resourceful Moulding got $640,000 together and set up The Hut Group to sell music and DVDs online. By 2017, the business had pivoted to become one of the U.K.’s few tech unicorns, worth $3.2 billion and selling beauty and nutrition. In typically contrary style, in the middle of the pandemic THG listed on the London Stock Exchange with the biggest London IPO in years.

Yet the sparkle quickly vanished and ever since Moulding has enjoyed a mixed relationship with critics of his company, railing against the City and financial journalists for their coverage and analysis, and handing over a dossier to regulators for what THG described as a coordinated attack on its share price.

Responding to the latest coverage, Moulding said that the board had “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”.

THG Shares Way Off Peak

The news sent THG shares up 15% to around $1.41 – but boy did they need it, with trading way off the flotation price of $6.43 and some 87% off their peak of $10.76 in September 2021.

That’s just seven months ago.

Since then THG has been battered and bruised, notably for allowing Moulding to serve as both executive chair and chief executive – running counter to corporate governance norms. Indeed, THG seems to have been determined the keep raising its head above the parapet, with the board also signing off a pre-flotation deal allowing Moulding to acquire a number of THG properties before leasing them back to the company for around $24.4 million a year. It says this was a way of cutting debt.

Growing increasingly spooked by the turbulence, in November last year BlackRock
BLK
, THG’s largest institutional shareholder with a 10.1% stake, halved its holding, dropping the share value by 9% to a then record low of $2.53. Moulding tried to calm investor nerves by hiring head hunter Russell Reynolds to search for a new non-executive chair, with business luminary Charles Allen taking up the role on March 22, in a move designed to help it prepare for a premium listing on the main London Stock Exchange rather than its current standard listing.

THG also appointed an executive from its Japanese backer SoftBank as a non-executive director, in a bid to dispel doubts about its relationship with SoftBank, which invested $730 million in THG last year.

THG Posts Strong Results

The irony is that news of the offers has come just as THG confirmed a 35% increase in revenues to $2.8 billion, helping push adjusted earnings up 7% to $207 million. First quarter results also showed a 16% leap in revenue to $669 million.

Moulding said it was a strong performance that was ahead of the targets set when THG went public and he singled out the strong performance of Ingenuity, a division building direct-to-consumer websites for other companies, which is key part to the company’s growth plans.

As for the U.K. IPO, Moulding said previously: “Now, there’s a reason I should have gone [to the U.S.], and actually I’d have had no profile as well, which would have suited me. No one would have written on me if I’d have been listed in the U.S. But it just is what it is. Next year [2022], it will be a different lesson.”