The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Fair play to Matt for relinquishing his GS pre Sep and this announcement will help rebuild trust for some shareholders left feeling frustrated and bruised by the recent termination of Apollo talks.
Yet rather than view it as an altruistic gesture, I personally always look at things through the wider lens of what he stands to gain from this and on this point I think it signals he has a deal all but signed and sealed to take THG private and retain control. This will come with pre canvassed support from the 65% and recommendation from the Board for approval to ensure it gets voted through.
The notion that he’s going to wait for a premium listing is for the birds imo and a red herring. It’s well documented that he despises being listed on the LSE, is fed up with the fugazi BS that comes with it and from a pure commercial angle THG would be worth many multiples of its fair value off the stock market than on should he decide to sell it on in a few years time. The FCA review narrative is a convenient stalling tactic imv as he has no intention of wasting time and money on this when it’s not going to happen.
As for when MM reveals his hand - I can’t see this being long. There is absolutely no benefit in him delaying an announcement as any time window would allow a hostile party to acquire shares on the cheap before making a move. In playing his ultimate bazooka card (GS surrender) today he has wrongfooted a lot of PE firms who would’ve thought they had 3 more months to prepare a bid, an MBO deal under his own terms would be the ultimate “checkmate” and two fingers up to the financial mob and its cohorts.
GLA
@jontaylor
You may be right about an Ingenuity spin off. Personally though I think Matt’s preferred option would be to keep the entire business together under his leadership/control with U.S. or Middle East capital providing the funding to take THG as a whole private.
The business could of course trade its way to a higher SP but this would take longer to unlock value and I agree with his opinion that the London market is a cesspit of hedge funds in cahoots with parts of the media to treat it like their personal piggy bank. It is not an unfair statement to say that THG would be valued at many multiples of the current SP in a different jurisdiction that applies fair PE ratios. Add to this I’m sure Matt feels he has better things to do with his time growing the business than dealing with journalists threatening to publish fake/FUD stories against the company unless he responds within 2 hours.
MM terminated talks with Apollo just over a month ago and it is possible he referenced ongoing Middle East negotiations at the time to secure large investors’ support to do this. It would then be logical that after a few weeks of talks he would fly out to close the deal in person. Pure speculation but the timings would fit and seem reasonable.
GLA
PE asset strippers are not getting their hands on this business imo. Special shout outs to Apollo and Bloomberg Intelligence for providing an offer benchmark and independent analysis of a SOTP valuation respectively - very useful info to present to Middle Eastern investors with deep pockets who are happy to be silent partners in a multi £billion company.
Https://www.retailgazette.co.uk/blog/2023/06/thg-ingenuity-pwc/
Enjoy the continued warm sunny weather everyone and have a great weekend - another week off the GS expiry clock. I’m personally bullish and see deep value in the current SP level so am happily buying.
Pretty much everything that could be said and debated has now been discussed on this board so until there’s further news it’s just a waiting game to see how things pan out. MM is either acting the most confident CEO on the planet or he has a deal in his back pocket to reveal. 14 week control window narrowing, wouldn’t put it past him to snatch victory from the jaws of defeat by making PE firms think they can get THG on the cheap before suddenly announcing his own take private deal at the last minute. GLA
If nothing else, this year’s AGM will make being listed even more “unpleasant” for MM due to an increasingly frustrated and disgruntled shareholder base. He could of course ignore all of this but this year he can’t. Why? Because there is an extra dynamic at play and the GS expiry adds a time pressure into the mix. Others think he has no plan, I’m in the camp that he does, purely on the basis that I don’t believe he will risk control being taken away from him in Sep and will get a deal over the line to retain the business he’s spent 20yrs building up.
@Ogggs
No it isn’t. No-one with this info is buying or selling stock and therefore trading. Being informed of anticipated company plans is perfectly legal. What would be considered insider dealing is if Directors were buying in advance of a take private deal that they had knowledge of but they’re not…. which others have suggested could imply their hands are tied at the moment due to this very reason…
We don’t know how the conversation went down re: what MM said to secure the backing of 50% of the 65% to terminate the Apollo discussions but I’m pretty sure it wasn’t this:
MM “Hey guys, please support me to terminate these talks without allowing Apollo to revise their offer further upwards and instead have your investment worth many multiples lower in value so I can be CEO in perpetuity with 51% controls.”
I’m guessing it was more along the lines of “we already have a superior route in pipeline to taking the company private on much better terms than Apollo could ever offer therefore if you could please back me, I will deliver this in the next few weeks.”
Gut feeling is that the ‘real’ bid (the one that goes through) will not be a non-binding proposal with no reference to price and leaked to the media. Instead it will be an agreement sewn up in private, behind closed doors and presented to shareholders via RNS with Board recommendation for approval. 15 week control window for MM to pull this off ticks down..
@manc39
My thoughts exactly. He’s built the business up over 20yrs and I can’t see him waiting until Sep to “see what happens”. Having the ability to dictate the terms of a deal via the GS is a huge power he currently wields and it would be his last big act of control to use it.
My guess is that a lot of retail investors are now on the sidelines, putting their capital elsewhere and waiting to re-enter early Sep but if a deal is agreed beforehand and doesn’t leak, they won’t get the chance to build a stake as the SP chart will stand up vertical like the Burj Khalifa. 😂
GLA