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Bizarre that we had RNS over Candy approach when others were only mentioned on the investors call at a later date. Hopefully we will see some of the big boys enter the fold next week!
I think this will go for 2.25-2.50. My average is £1.60 so not a disaster like it was at 80p
@blinky don’t forget the “special share” was put it as MM thought this would be whiped off the market even at £5. That was the world back then. You can’t say PE are interested just because the price is low
PE funded this all the way to IPO (KKR)
Goldy
Hosai
Yes you’re right. Hopefully the bid. Or the MBO will come somewhere between where we both are predicting. I would be delighted with £4.
@ OAC, yes, the Belerion offer did raise an eyebrow for me.
Will be interesting to see how Lord Allen handles this.
Good luck to you and the other LTHs here.
But B1nky question is would he have enough buyers from the current big and medium sized holders? I believe a bid needs 90% to force through a deal, he would need to keep any players not involved happy.
£4 might not look cheap now but it was £6.84 8 months ago (a takeover premium at that point would have been around £10?) and I'd imagine PE never thought they'd have the chance to get in on THG considering THG had previously rejected £3.9 billion when they were making £736 million a year and had £186 million in cash compared to now with £2.2 billion a year revenue and £530 million cash.
SP28
I do hope you’re right and we get over £4. But PE are only interested because the price is low, and they’re opportunistic. They wouldn’t be circling if the price was £6. So those that say the current share price is irrelevant, are wrong.
You are right when you say MM won’t SELL at 1x revenue.
But he will BUY at that price!!
This is all interesting stuff, proper investors having a good debate, well written, articulate posts giving food for thought. What these boards should be about, alas its rare.
Seems rather coincidental? perhaps that these bids appeared just 9 days after the 10th May, the date Softbank and Sofia were no longer bound by the takeover rule that meant the price would have to be 596p if they were involved in a buyout.
Appreciate this is now as much about the individual investors entry point - satisfaction levels
MM has a tricky balancing act, he won’t want to load THG with too much debt via the buyout as he will want capital to grow the business, if he pitches the offer too low he may hit resistance
Hence his buddy of 12 years and fellow director Iain Mac throws his £1.70p into the ring as starter for ten to gauge reaction - it’s worked
The BoD / Lord Allen be weighing up what they can get away with?
MM can now start to read the room and weigh up what is the sweet spot?
I would be delighted at £4 let’s hope that’s the number
Private Equity Sale - will ONLY be done if something ludicrous offered.
Management Buyout - To maintain integrity, would have to deliver minimum £4.
Totally endorse that OAC
Having stayed with this share because of the fundamentals, even when down over £100k, i don't want it sold on the cheap and see no necessity for this.
The current trading cycle is horrible, but like all phases it will move on and with solid foundations like we have in THG, it would be imprudent to sell on the cheap
@SonnyBurnett..well said. THG is not in financial distress, has more than enough liquidity for next few yrs and will become cash flow neutral.
If its case that MM and others take private because they don’t like LSE listing it will smell bad to just roll and take out at a low price with other investors. I am hoping Lord Allen will look after the minority holders.
What is favourable for MM and other large holders is the II churn and increased PIs with lower entry rates who may be ok with a quick profit…but still leaves dissenting holders like me who will not be happy with anything less than £4 in today macro environment…if they want to take private they just need to be getting on and buying as much as free float as they can and then offer decent premium to minority.
I know the likes of you, OneDayRodney, Toansy, Commonsense etc have a fair amount invested…I do as well with a low entry level with 3.5m shares and currently in profit.
Whilst I don’t fully understand Belerion gameplan I am disappointed they pitched 3 low level offers and MM would have known so something not quite right. If they wanted to put THG in play then it would have been better to pitch at a higher level as the optics of a exec director with 10 yrs history with THG and holding 6m+ shares personally and via Belerion looks just terrible (admittedly King St will have written chq).
I really hope Lord Allen is up for this as he is emotionally detached and I am happy to roll for long term a PLC unless credible price paid ie £4 plus.
GLA LTHs and don’t sell yourselves short as we are not in a liquidity crisis
I'd be peed off if I was denied participating in the great growth business for 2-3 quid. He would sink his reputation if that happened
I'd rather wait 2 years for 5-10 quid if that was the case
Okehurst doesn't it depend on how many of the big or "medium" shareholders were in on the buyout? If they and retail together didn't want to sell at £3 and wanted higher they might be able to reject a lower bid.
THG still believes it will grow at around 20-25% this year even during inflation, war, supply chain issues and perhaps possible recession.
By any standard a company that continues to grow at such a rate and has beaten targets set at IPO should be considered a growth company.
Seems like many of you think the 80/150p range this has traded around seems normal to just offer a premium on top of that while in reality, even during current market conditions an offer of around 400p would value the business at just 2x revenue which is very cheap for a growth stock and imo not asking for too much either.
The only reason i see this selling for around 250/300p is if MM together with the major holders shaft certain II (that bought at IPO but not part of taking private group) and PI and just take it private on the cheap. It would prove the media were right about MM, and i for one would certainly not buy into any company MM would be involved with in the future.
Suggest we need to look at this from MM’s / BoD position - assuming they are taking private
They will want to get away with the lowest acceptable price they pay us?
£3B to £4B (£2.25 to £3) ?
Can’t see MM paying us £4 a share - would be blown away if he did but gut feel he will pitch between the above
Best deals are when both parties think they got the good end of the deal, I believe it'll be around £2.75-£3.00 max.
Absolutely no chance in the world this is getting sold in the £2's, zero chance. Full stop.
It was offered £4billion 4 years ago when revenue was £700m, this year it will hit £2.7billion. Sell for 1x revenue??? What world do people live in, when he didn't sell for 6x revenue back then. People are bonkers and haven't done any research, and now all of a sudden so called experts!
He is in a unique position with his golden share, he can refuse all ridiculous offer.
£4+ is a fantasy today. I agree
My point though is it won’t be in 12 - 24 months so why sell now when you’ll get double once fright costs subside
You don’t have to sell just because there is a bid
You own shares in the worlds largest and vertically integrated nutrition brands. Most of those have sold for 4x revenue and you’re willing to sell yours for 0.5x?
The business has liquidity. Yes it will be net debt this year but then the cash generation will come
Hold
Goldy
I agree. It's more likely in the 2 range. I personally think talk of 4+ is fantasy land.
And I really really WANT to be proved wrong.
It’s honestly not like that. You’re investing for growth along with management. You can’t rip their eyes out pre deal and expect the best from them. Also as I said vendors won’t sell to firms that rip apart hence why there are so few firms that do it. As I said you’ll find few examples over the last 10 years. If anything with the flood of cheap money PE firms have got sweeter and sweeter. Of course they want to buy cheap but given PE is so competitive and you’ve a advisor firm selling you typically have a competitive bid process. It’s like selling your house. You have an idea of what you want and the estate agent will bring you the buyers. So how is a PE supposed to snag cheap? As 5 other firms are also bidding up
It’s an old fashioned view for true PE. Family office is different (it’s family money they don’t need to care for reputation as much). But PE now will wince at the idea of bad press. It’s not worth it as they will see future deals dry up. Don’t forget PE gets paid for the deals. The performance goes to investors. Only on exceptional performance do they get carry
Goldy
Goldy
I wish I shared your rather romantic view of the PE industry. I don’t think that they are these benevolent companies working for the greater good. I think you’ll find that they are still trying to buy assets as cheap as possible, perhaps add a bit of value with add ons, etc., then sell and move on to the next!
I agree how the macro situation stands today, a bid north of £3 is unlikely to happen. I happen to think around £2.8 - £3.2 is fair value as of today, but again I agree that PE won't want to offer this today.
In that case, MM will most likely contine to reject bids and as the bids get higher, so will the SP and should continue to see step changes as bids develop. Fast forward 18 - 24 months, this could be a very different animal once inflation comes crashing back down to earth (and it will with a bang!). North of £3 once growth is reignited and bottlenecks recede is very much a possibility.
I wouldn't be surprised to see bids come in circa £2 in the coming weeks....but will probably stall around that level.
This isn’t. It entirely depends on the fund. Some funds are break up (more typically these are in the US but are rarer) but most funds for the last 10 or so years have shied away from this. Why?
As the public backlash in 2008/09 meant they had doors slammed in their face. Sellers wouldn’t even talk to them even if the bid was higher
The PE firms from the pretty women film are long gone. Look at the portfolio of all the big big big PE firms you’ll not find many break up assets. They are more often the opposite platform and then buy and build
Goldy