hmmm not so positive news article which explains the share drop today.
Termination of discussions with Apollo
Share price likely to drop back down to around 50p mark
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Iv been enjoying the rise 
Post by Matt Moulding on LinkedIn. Interesting that Apollo valued Ingenuity higher than other divisions combined.
Today THG announced that we’ve rejected a bid from US PE giant, Apollo Global, and ended discussions.
Why?
Just about every major PE firm has enquired about taking THG private. Usually, nobody finds out. But if there’s a leak, then the Takeover Panel forces an announcement. This is what happened with Apollo.
PE interest isn’t surprising. For the 3 years before IPO, THG shares traded at £3. Having doubled in size we then listed THG at £5 a share in Sep 21. They rose to £8 in the first-year post IPO but, after the Numis led short attacks when they weren’t made a Broker to THG, shares fell to as low as 30p in late 2022.
The last time THG shares traded at 30p was in 2009, when the Group had £80m Sales and only sold CDs! Today THG is 28 x bigger (and we haven’t sold CDs for years).
PE firms usually want majority ownership. We’ve been clear: don’t bid if you want 51%, plan to use debt to leverage up, or won’t allow existing shareholders to stay invested. This rebuffs most PE firms.
c65% of THG shares sit with me and several long-term shareholders. Our LSE pain comes from the 35% of “fast money” shares actively trading. I’ve personally spent £39m since IPO, increasing my stake and reducing THG shares on the market. The most recent being £5m at 39p in late 2022.
Yes, it’s unpleasant being listed in London. But I’ve spent 20 years building THG, from an idea while sat on my sofa, into a global Group with Sales of £2.2bn. We’ve just completed a vast expansion of our Tech and global infrastructure. We’re just getting going.
It’s well known that PE deals are lucrative for Management. THG would be worth billions more away from the daily market manipulation involving Bankers, Hedge Funds and Pundits.
PE typically give Management 10% of the company as an incentive, with 5% to the CEO. These incentives are worth hundreds of millions to staff. PE can be compelling.
Like with all previous bidders, the Apollo bid wasn’t right for THG. Yes, it allowed existing shareholders to stay invested, with me continuing to run the Group. But Apollo also wanted PE controls, particularly across Beauty & Nutrition where they asked for controlling equity rights.
Like all previous bidders, Apollo were told their bid valuation and structure was unacceptable. Yesterday Apollo set out how they could raise their bid further, ahead of a deadline set by the Takeover Panel. Their latest view on Ingenuity had it as being significantly more valuable than the whole of THG the day before the bid leaked!
No shit! Ingenuity is great. But neither Apollo’s bid price, nor the structure proposed, are in the best interest of THG. Myself, Charles and the Board, supported by>50% of shareholders, all agreed on that.
And so, the Apollo bid was based upon smart financial engineering, capitalising on a wildly low share price from THG being on the LSE. I get excited about building and growing things, not spreadsheets.
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SHARE OF THE WEEK: All eyes on troubled THG
Really good uptick over the past month.
I wonder what is going on behind the scene’s as we ar bucking the trend of most shares over the past month.
My slow accumulation of this over nearly 2 years is finally paying out I’m finally nicely in the green.
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I am wondering if there are more takeover talks going on in the background as that would explain the uptick of over 50% in one month and under takeover rules THG only have to revel this if its leaked in the press etc… or a firm offer is put forward.
I’m a recent investor: the reason I invested is quite simple and does not rely on takeover talks. I’ve been watching for the company over the last year, and despite all the corporate drama and takeover rumors, the business is solid and the company is undervalued at this price. The company’s footing is a little wobbly but they’re a boring retail business, a business so well understood that a little wobble in their footing means nothing: they have easy access to capital if they need it. The THG ingenuity technology division is little more than a vanity project from the time of free money, but that’s fine, it’s a wash: no cost, no benefit.
I’d rather no takeover happen because the business is fine as it is and I’m confident it’ll return more for investors ticking along as it is now, however, if a takeover does happen, it’s difficult to imagine it happening anywhere near the current price.
It has been a leaky ship in the past so anything is possible. The last trading update was good if they keep hitting their targets re trading then it will rerate regardless of being taken over or not.
Hey I personally don’t mind either way I brought these as a long term hold so if it got sold early I would be ok if it was at a good price but equally happy to hold for the long term I am in no rush to sell.
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Likewise. I trimmed some but still have substantial amount of my holdings in THG.
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Hmm interesting, Iceland has started selling a frozen range of my protein products.
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According to their latest annual report, the nutrition division (MyProtein brand) is 30% of their revenue.
I have always wondered why Ingenuity was the big selling point for THG, and the MP brand was never acknowledged as the interesting part of the business.
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We got some of their ice cream last week it is very nice I can recommend it.
I brought all 3 today and had the salted caramel and it was really nice would recommend it.
Another interesting story.