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What I would also like to know is any developments for the Autostore Pay per Pick deal announced earlier this year. Could be exciting if this has taken off. Ingenuity then also becomes a software provider.
It's a win win win for Autostore, Ingenuity and any Autostore clients. Ingenuity can provide the full solution for any Autostore clients as opposed to multiple providers which increases cost, time and complexity.
https://www.thg.com/news/thg-ingenuity-signs-global-distribution-partnership-with-autostore
Ingenuity has no involvement in manufacturing, manufacturing of Beauty and Nutrition sits within those respective business.
Ingenuity is a technology platform enabling E2E Ecommerce for all THG Businesses and all external clients.
Let's take an ultra pessimistic view.
In Kelso's latest letter they state Nutrition peers are valued at 3-7x revenue and Beauty at 3-5x revenue.
To simplify the matter and take an ultra pessimistic view on valuations for all divisions, forget the lowest 3x revenue multiples, lets go even lower, and use 2x Revenue multiple instead!!:
THG INGENUITY
Apollo offered Significantly more than 69p.
Let's just stick with 69p, we will totally ignore what Significantly means!
Market Cap - £900 million
THG NUTRITION
At 2x Revenue
Market Cap - £1.5 BIllion
THG Beauty
At 2x Revenue
Market Cap - £2.4 Billion
TOTAL - £4.8 Billion or 370p per share
And this is the gravity of the problem, the disconnect to real value is simply insane. Markets are totally broken. Hence why Kelso and OVMK (maybe others) want strategic actions immediately to close the gap.
Kelso and other major holders know predators are waiting in the wings to pounce and the gap has to close. And unlike all other undervalued companies out there, with THG's 3 separate businesses the fix is easy, its in a unique situation, just needs actioning.
For major PE firms, THG is their perfect buyout target, buy it, split it, sell it, and voila, they have instantly multiplied their money . What Kelso are saying, take defensive actions immediately, to drive up the share price.
If you then go to AVERAGE peer valuations, and you could easily argue for 600p, however il leave this to others 😉. Most of us are ONLY after the magical 250p LOL
I can guarantee however small or big the investor is, absolutely nobody is going to be happy with this situation, everyone wants a return. Funny how quickly things can change. One minute MM has 50%+ support, next minute gone like domino's. If PE offered 250p-300p today, would they still back him? I'd guess not!
No one knows what MM's plans are to keep the 50% supportive and quiet.
Always said, MM's greatest deal would be to take it private for 250p. When the environment improves, it would be worth alot lot more.
HOTC proved to everyone real world value is multiples.
DYOR
IMO I reckon Kelso and Co know PE firms are circling again!
They are advising MM to drive up the share price as a defensive mechanism to ward off any predators. They are not calling for him to sell up, quite the opposite.
John Goold..
"To avoid UNWANTED PREDATORY INTEREST at the wrong levels"
"Announce a strategy for the demerger of its three stand out global businesses WITHOUT FURTHER DELAY"
We will have to wait and see.
@Hardwell - Exactly right.
Apollo or someone else comes to the table today and offer £2.50 a share, how is everyone going to vote?? Now without that golden share! I reckon majority would vote for the deal. Simply as.
With Golden Share they were all yes men/women, knowing its pointless to have a differing view. It's a totally different ball game now.
Message to MM, do something, or someone else will do it for you.
In the corridors of power is there a leak eg Apollo are/will be back or another PE firm about to pounce, hence why they are urging Moulding to take immediate defensive actions???
Remember Apollo were very interested. They were willing to up their offer further. And bought in 2 industry experts to advise them. Now with golden share gone, and some big shareholders shifting positions, who knows what will happen.
https://news.sky.com/story/former-coty-ceo-puts-gloss-on-apollo-bid-for-beauty-retailer-thg-12871291
So one of the major holders have broken ranks.
As Kelso indicated, they have been speaking to the major holders, no surprise.
Right then, form an orderly queue, who is it going to be next, Sofina, Balderton...
Everyone and their dog can see the huge undervaluation, and it's an easy fix.
Https://www.cityam.com/london-based-marex-files-for-new-york-float-in-huge-blow-to-the-city/
What have the UK/LSE got themselves in!!
Every single day either:
1. A company wants to delist from LSE
2. Being bought out by PE or someone else
3. Most major IPO's ignoring LSE
Very troubling times for the UK as a whole. When there is a chronic undervaluation in many of our companies, this is what happens.
Current Market value - 78p
Minimum SOTP - 225p
With a huge divergence to real value, like HOTC, THG is a sitting duck, Kelso know it. Ofcourse predators will strike again, its what they do, and precisely why Kelso is suggesting to drive up the share price! Do they know of another PE waiting in the wings??
Kelso are not suggesting anything novel, MM himself suggested separation of Beauty back in Sept 21 RNS!! As he felt a valuation of £6+ was way too low!
Absolutely no one would be surprised with more bids from PE's, with 3 separate global businesses, easiest takeover target on LSE where they can extract significant value instantly.
Eg. Buy it for say 225p, PE sell Nutrition to FMCG, they effectively get the Beauty and Ingenuity businesses for free, or even money on top, IMO this is the reason why THG is so so lucrative for them.
PE can't get "buy 1 business get 2 free" anywhere else on LSE, why THG is so unique, which is why they are always circling THG. That instant unlocking is too tempting for them. Even the separation is done for them Lol.
Let's see....
DYOR
This letter came on the 30th Oct.
Former Head of Communications from Elliot Advisors joined Kelso on 11th Oct! Mmmm.
If things continue this way, as Kelso have intimated, I would not be surprised with some more PE bids on the horizon. And this time no Golden Share.
PE are experts in extracting value. THG is easy picking, it has a clear target on its back, as a 3 business conglomerate, THG is pretty unique. As Kelso have said, you demerge, and value unlocked, if not PE can do this without breaking a sweat.
Once some of the big boys join Kelso's camp, and it feels like a few already have, MM will have no choice.
(IMO MM is looking for the MBO route rather than demerger route, that's just my thinking with everything said by him over the last 12 months)
Time is ticking.
GLA LTH's. Our unlocking moment has to come one way or another.
Wowzers
Exactly why many PI's are invested, fully aligns with LTH's thoughts, and when that unlocking event arrives, it's minimum 225p target
I reckon some of the bigger holders also want a demerger, and Kelso have been speaking to some of them...
""We acknowledge fully that Kelso is a small shareholder, but we believe that many other shareholders, both small and *LARGE*, share our view, having become increasingly frustrated and impatient""
1 RNS, and it's whoosh. Just have to hold tight, or add at this ridiculous low level.
IMO MM takes it private before separately listing.
DYOR
2017 - £2.5 Billion, 200p a share
https://www.google.com/amp/s/news.sky.com/story/amp/hut-group-hits-2-5bn-valuation-with-125m-old-mutual-investment-10984629
2018 - £3.9 Billion, 300p a share
https://www.retailgazette.co.uk/blog/2018/09/hut-group-rejected-3-9bn-takeover-bids-continues-aggressive-growth/
2020 IPO - £5.4 Billion, 500p a share
https://www.reuters.com/article/us-the-hut-group-trading-idUSKBN267102/
2021 Softbank Deal - £6.5 Billion, 595p a share
2023 - £1 billion!!!
Something doesn't rack up LOL
Yes, in todays climate may not be worth £6-7 a share but then no way in the world its worth just 80p LOL
Let's rewind back SIX YEARS, when it was a totally different company, even then it was worth 200p a share @ £2.5b, no wonder PE firms are all over THG.
Make it make sense.
DYOR
Ten entertainment group bought by US Private Equity
https://www.cityam.com/bowling-operator-ten-the-latest-london-target-for-us-private-equity/
TUI delisting for Germany
https://www.cityam.com/tui-mulls-london-delisting-in-potential-blow-to-capitals-stock-exchange/
HOTC, Mars buyout
https://www.cityam.com/hotel-chocolats-sweet-534m-mars-deal-leaves-london-market-on-a-sugar-high/
To name just a few.
What is going to be left on LSE/UK!!
With the huge undervaluations on LSE, as LSE is structurally broken, UK listed companies are simply being picked off as they are all in bargain basement territory.
Who is next?
We all know what our CEO wants 😉.
With 50%+ controlled by MM and Co, atleast we know THG can't be picked up for a bargain, unlike many other companies who are just sitting ducks.
The more you read, you begin to understand THG has just grabbed the biggest bargain in their history!
Biossance parent company was originally partly funded by the Bill & Melinda Gates Foundation.
As MM said $300-$400m was spent developing Biossance.
In 2022 Biossance reportedly had global revenues of $110m/£85m
Similar valuation to Aesop and industry buyouts at 5x revenue, and Biossance should be valued at £425m, a luxury beauty business. That's nearly half of THG's market cap Lol
THG just paid £15m!! THG's best ever purchase by a country mile. An absolute gift.
Can't even quantify all the indirect benefits, brand value, cost synergies, expansion on Ingenuity, production integration, and dare I say it, Reece Witherspoon at THG Studios 😉
Would not be surprised someone like Nestle taking a bite out of Myprotein!
Nestle Largest FMCG in the world, and one of Ingenuity’s major clients.
And they could do with a healthy addition to their portfolio!
Beauty with THG, any deal with any or all divisions unlocks that huge trapped value. Diversification and optionality all in one.
https://www.wsj.com/articles/nestle-says-less-than-half-of-its-main-portfolio-is-ranked-as-healthy-53778554
https://www.thebusinessdesk.com/northwest/news/2058611-the-hut-group-signs-worldwide-tech-deal-with-nestle-health-science
Https://www.thetimes.co.uk/article/f71f2a0f-a08c-4cd7-8044-f3c86c6176f5?shareToken=f377d6487bba51673a3b30d809d6adc2
Kelso Plc posted a Telegraph article in July this year which stated that the UK obesity problem cost the NHS £6bn a year. Today the Times lead article entitled ‘Economy pays heavy price as UK gets fatter’ discusses Henry Dimbleby the UK government’s former food adviser’s belief that the cost to the UK is far higher at nearer to £100bn a year. Mr Dimbleby is proposing smoking-style restrictions on junk food. Kelso has this year compared the sugar and chocolate problem to the world’s tobacco problem. In our RNS in April Kelso highlighted how global institutional investors were increasingly asking for breakdowns from larger food and beverage (F&B) companies as to the overall healthiness of their product portfolios. In a separate RNS in July we highlighted how Tescos and other large retailers are setting targets for how much of the total product on their shelves is ‘healthy’. Changes such as these, as well as consumer behaviour, are driving the large F&B companies to diversify their portfolios with larger proportions of nutritional products. MyProtein, part of THG plc and generating approximately $1 billion in global sales, is expected to significantly benefit from the growing preference for healthy lifestyles in the long run.
Nobody should be divulging personal info, esspecially on an anonymous bb, doesn't make an iota of a different to anyone how many shares someone else has! Cannot understand why people ask this question.
Stick to sharing useful info, simples.
IMO Everyone's got to a stage where they know SOTP is multiples and are firmly holding ignoring tiny fluctuations, and totally immune to any FUD.
Apollo offer, now HOTC deal, Kelso and numerous articles further justifying what we all know. It is not THG alone might I add, HOTC just proved it. Real value for them was nearly 3x market value, says it all really!
THG with 3 separate businesses, and a founder/CEO publicly airing his frustration, THG is primed better than most to unlock that trapped value. Everyone knows if the right deal can be negotiated, MM is off the markets in a flash. Besides that he has all the optionally to strike deal/s.
For THG Apollo approach proves serious institutions like the business, see it massively undervalued after conducting their own due deligence, and are willing to buy it. They offered significantly more than todays market cap for Ingenuity ALONE. Shows how structurally broken the markets are.
For a global brand like Myprotein. If a FMCG (remember through Ingenuity they have all the top FMCG's on tap 😉, Nestle, Heinz, Coca Cola, Mondolez, P&G to name just a few, i'm sure theres been some interesting conversations with them lol) offered 3x revenue for THG Nutrition today, so £2billion+, or 150p a share, will anyone be surprised? No, no one will bat an eyelid, some will say its a bargain. Last year 2 similar companies got investment, a German company at 5x revenue, and a US one at 11x revenue!
Anyway LTH's, enjoy your weekends.
Always DYOR
Luxs - with MM anything is possible. dyor
Whatever happens, bet your bottom dollar city ain't getting a whiff of his plans LMAO
Now that he is one of the largest holders in Kelso, just for banter, I'd call a meeting, propose to sell all the other investments and buy THG instead. And when THG is back over 100p, 'no you can't just sell up, I don't believe in fast money' Lol. Next Kelso statement will be interesting, I'm sure they have to run it past MM and Munro first 🤣
Makes you wonder why they didn't just buy into THG itself and gone into Kelso?
If something is pending, obviously they can't buy THG, but can they buy Kelso?
I'm sure he hasn't bought Kelso to diversify into NCC, The Works and Angling Direct Lol
Can't take your eyes of THG 😉