THG Plc has ended talks with Apollo Global Management Inc. in the latest failed takeover attempt of the struggling UK online retailer.
(Bloomberg) — THG Plc has ended talks with Apollo Global Management Inc. in the latest failed takeover attempt of the struggling UK online retailer.
The British company, which operates hundreds of beauty and lifestyle websites, said in a filing Friday that after a short discussion with the New York-based private equity business it has become clear there is “no longer any merit in continuing to engage with Apollo.”
It said it had rejected Apollo’s approach for the same reason it rebuffed others — “inadequate valuations and the nature of those offer structures.”
Formerly known as The Hut Group, the company co-founded by Chief Executive Officer Matthew Moulding has had a bumpy ride since its 2020 listing due to governance concerns, the surging price of whey — which it uses in its protein shakes — and speculation over the future profitability of its Ingenuity unit, which helps other retailers sell online.
THG stock, which had initially risen on news of Apollo’s interest last month, has fallen by about 22% since it appeared that a formal offer may not be forthcoming. The company’s shares, which closed at just under 75 pence Thursday are also still trading well below the 500 pence IPO price.
Entrepreneur Nick Candy last year walked away from making an offer for THG, as did a rival consortium consisting of Belerion Capital and King Street Capital Management. At the time people with knowledge of those bids said Manchester-based THG did not engage with either party or grant any due diligence access over concerns about the levels of debt in both proposals.
Read more: Nick Candy and Belerion Capital Drop Pursuit of Retailer THG
THG said Friday that the board remains fully confident in the company’s strategic direction and long-term prospects as an independent business. It added the profitability and cash flow improvements it made during the first quarter were continuing and it is making progress with “diversity objectives” aimed at strengthening the board.
Earlier this year THG announced a strategic review of loss-making businesses outside of its core beauty, nutrition and Ingenuity platforms. The review is intended to simplify the company.
Last month, THG, which is facing pressure from an activist investor, reported a slow start to the first quarter with sales turning negative. This came after a disappointing 2022 where earnings more than halved as the effects of inflation meant customers cut back on non-essential spending.
However, it said that efforts to improve profitability would start to bear fruit in the coming months.
SoftBank Group Corp, a one-time anchor investor, sold its stake in the group last year.
(Updates with additional improvements throughout)
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