The Times Today p117 Jun 2022 06:52
THG shares on slide as two bidders walk away from takeover
Both of THG’s potential suitors have ruled out a takeover after the ecommerce firm’s board said that their proposals were unacceptable, sending shares in the ecommerce company down by more than a fifth. Nick Candy, the British property tycoon, announced that he would not be making a bid for the business, with sources saying that his firm had not been granted access to sufficient information to carry out due diligence before a takeover panel deadline. Candy, who is a friend of THG’s founder Matt Moulding and Sir Tom Hunter, another early THG investor, stunned the market last month by announcing that he was “in the very early stages of considering a possible offer”. Industry analysts doubted whether Candy, who had also touted ambitions to buy Chelsea Football Club, would have the financial resources to table a £2 billion takeover. However, sources close to the process said that Candy Ventures had submitted two fully funded bids, backed by a large institution and sovereign wealth funds. A source said Candy Ventures, working with advisers at Bank of America Merrill Lynch and Deutsche, had been working on a third bid at a significant premium to THG’s share price. Candy invested in THG during its stock market listing and had been looking at the company for months before its interest was outed. In addition Belerion Capital, run by Iain McDonald — who has been an early backer of THG and a non-executive director since 2010 — had tabled an initial proposal at 170p-a-share. Despite McDonald’s closeness with Moulding and the company, his sweetened bids have also been rebuffed. Belerion Capital said that together with King Street Capital Management, a New York firm that was providing financing, “does not intend to make an offer for the company”. THG said that the approaches had been “unsolicited, and in the unanimous opinion of the board, were unacceptable and significantly undervalued the company”. It is understood that McDonald recused himself from the board’s bid negotiations. Shareholders had previously told The Times that the ecommerce company should not entertain takeover offers below £2-a-share, which would have valued the business at about £2.5 billion. Under Takeover Panel rules neither Belerion nor Candy can make another bid in the next six months without agreement of THG’s board of directors. Shares in THG fell by 30½p, or 29 per cent, to 74½p, valuing it at £1 billion — a steep fall from its 500p listing price in September 2020 when it came to market with a £5.4 billion valuation. THG said that while it “is clearly aware of the macro-economic challenges, the company continues to perform well, and in line with its own expectations”. THG, previously known as The Hut Group, was started by Moulding and John Gallemore in 2004 and operates more than 100 international websites that sell brands direct to consumers through its Ingenuity platform.
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