..one for the pot..20 Sep 2024 22:03
Worth revisiting past commentary from close holders:
Acquisition attempts and other scenarios
The company’s market price continued to slide throughout 2022, which prompted a variety of wealthy individuals, consortia and Private Equity parties to put in bids for acquiring part or all of THG.
The first acquisition attempts failed because the management and a majority of shareholders were
unconvinced by the offers and corresponding structures.
An offer of GBP1.70 was said to have been rejected and around October 2022 the equity price hit an absurd low of 31 pence. This was shortly after Asian tech investor Softbank, a champion at destroying capital, sold its interest in THG for 38 cents to Qatar Investment Trust and CEO Matt Moulding.
From that moment, things started to look up again and in April this year private equity company Apollo put in a bid for the company. This offer was rumoured to involve a highly complex construction of minority interests and demergers at a total price in the region of GBP2-2.50 per share. After much consideration, this offer was likewise rejected.
Some interesting information that came out of the negotiations was that in the eyes of Apollo the Ingenuity division alone merited a valuation in excess of GBP1.2 billion. According to this keen buyer, this business unit, which we’re least able to value accurately and for the sake of convenience put at zero in our calculations, represents almost the whole current market value of the company.
We certainly cannot rule out the possibility that THG will no longer exist in its present form in a few years. THG is now the parent company of three business units that can also be run separately. The units could be given separate market listings and other third parties could acquire an interest or take over a unit in its entirety. Unilever, P&G or Nestlé could pay GBP2-3 billion for the Nutrition division.
Such valuations are conservative in view of what’s happening on the market. Overall we’re already talking 1.5 to 2.5 times the total market value for the second largest division of THG. However, THG has no wish to take that step yet as it firmly believes in its own unique strategy.
Another option that is the source of much speculation is that Matt Moulding (together with a few partners) delists the entire company again at an acquisition premium. This would calm the waters for THG and remove the pressure of having to perform each quarter.
https://www.ovmk.nl/storage/downloads/quarterly-report-q2-2023.pdf
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