THG Stock Rollercoaster As Bid Targets The Buff Billionaire

At one point today shares in embattled THG were up nearly 50%, as investors gave their verdict on a tentative bid for the U.K. online cosmetics and nutrition group that has seen its value drop nearly 90% since its IPO in 2020.

Colorful – or perhaps just plain controversial – founder Matt Moulding (dubbed the ‘buff billionnaire’) said about this time last year that listing on the London Stock Exchange had “sucked from start to finish”.

He might not have to worry about that for much longer, although investors will wonder what tomorrow may bring.

THG, which operates brands including Cult Beauty, Look Fantastic and MyProtein, plus its proprietary ecommerce outsource platform for retailers, confirmed just a day before the company announces its results, that it had received a bid from private equity giant Apollo Global Management
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Although the online retail group was at pains to highlight that the offer was a “highly preliminary and non-binding indicative proposal”, shares nearly touched $1.20 in the afternoon before dipping backward a little to just under $1.17 at close.

That’s still over 40% higher than it started the day.

THG said that there was no certainty that any firm offer will be made and a further announcement will be made “if and when appropriate”. Under Stock Market rules, Apollo is required to confirm whether or not it will make an offer for the firm and, for its part, THG has form by no later than 5pm London time on May 15.

THG Rejected Offers

THG rejected several takeover proposals last year, which Moulding called “unacceptable” and said had failed “to reflect the fair value of the group”.

However, since then Moulding has had to cede some of his power as investors have grown increasingly disgruntled at a business that floated with a $6.7 billion price valuation when it listed in September 2020.

Even allowing for today’s rise, that value is just $111 million. THG further slashed annual sales and profit expectations in December amid rising interest rates and energy costs.

Simon Bowler at investment bank Numis has forecast that THG losses will have widened to $342 million in 2022, taking the total to more than $1.23 billion over the last five years.

Earlier this month, THG warned of a further 180 redundancies after the closure of its OnDemand division, and reports over the weekend claimed that one leading investor had warned Moulding to “get his house in order”.

IPO Disasters: THG And Deliveroo

Moulding had also agreed to give up the right to veto any takeover deals and brought in City veteran and former tv network boss Lord Allen as chair to address governance issues, namely over loan and remuneration packages.

THG has previously rejected several takeover proposals and the company has also faced speculation that it could be taken private after its value nosedived.

THG and food delivery specialist Deliveroo – which has seen its initial valuation fall by two thirds – are two of the most disastrous London flotations in recent years, and have put a hole in international investor confidence over the U.K.’s role as a key destination for tech IPOs.