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THG Shares Spike After Apollo Takeover Bid Is Confirmed

April 17, 2023
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The shares of THG Plc have surged by as much as 47% following the announcement that the embattled UK online retailer has received a non-binding acquisition proposal from Apollo Global Management Inc.

New York-based private equity business THG is now given the deadline of May 15 to decide whether to make a firm offer, the company said in a statement released Monday. Amounts associated with Apollo's initial proposal have not been disclosed by the company. 

THG was previously known as The Hut Group and was founded in 2020 by Matthew Moulding. Since then, the company has faced a rocky road due to governance concerns, a spike in the price of whey, which the company uses in its protein shakes, as well as speculation about the future profitability of the company's Ingenuity unit, which assists other retailers with their online sales. 

In a bid to acquire THG last year, entrepreneur Nick Candy, who had joined forces with Belerion Capital and King Street Capital Management, walked away from making an offer for the company. Observers with knowledge of the bids at the time said THG, a Manchester-based company, did not engage with either party at the time or granted any access to the due diligence process because of concerns about the levels of debt in both proposals. 

Apollo Global Management Inc.
Apollo Global Management Inc.

There was a bid from a consortium called Belerion that valued the firm at $2.6 billion (£2.1 billion), but THG rejected the offer, saying that it was "significantly undervaluing the company." At the present time, THG shares are trading around 93 pence.

The THG brand announced earlier this year that it would be reviewing the strategic direction of its loss-making businesses outside of its core beauty, nutrition, and Ingenuity platforms. There are hundreds of websites operated by the e-commerce group, so the review is meant to simplify the business process for the company. 

Ahead of the company's full-year results, scheduled for publication on Tuesday, THG also warned in January that profits would be lower than expected for the year. 

The SoftBank Group Corporation, which was once considered to be an anchor investor for the group, sold its stake to the company last year. 

It has been over 80% since THG's shares were listed on the stock market, and some investors believe that the shares will continue to decline in value. As of April 13, according to data from S&P Global Market Intelligence, shares out on loan, an indicator of short interest, represent about 10% of the company's free float, which is a measure of short interest in the stock.

Cathy Hills
Associate Editor
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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