Member Info for Yorek

This property news is certainly spreading:

https://www.prolificnorth.co.uk/news/ecommerce/2023/07/thgs-ps250m-manchester-hq-could-be-sold

Anyone know what other property Moulding Capital hold? According to a historical FT article, the details are not publicly available….

Example is SoftBank article: https://www.reuters.com/business/finance/softbank-steps-up-asset-sales-sinking-portfolio-2022-08-09/

I may be wrong, but I thought SoftBank had financial challenges and sold down their assets to ride out a ‘severe market’. As always, the press reported the issues as being with THG and not SoftBank.

If Autostore invested in THG, it would be an indirect SoftBank investment.

Thanks Boom, but I’ve been in this share longer than you then, so am staying put.

I first bought in October 21, at £2.84. My average now is 84p, so I’ve been through it with you…and am holding tight.

I agree with what you’re saying, I just get confused by the cryptic comments about an MBO or bid, so am trying to understand the rational for those positions really, as some people have such strong convictions.

Not to worry, onwards and finally upwards. Would love it to hold above my average for once.

Thanks Schlemiel

My rationale for a capital injection, a relist of ingenuity elsewhere and a premium listing for THG Health & Wellness (Beauty & Nutrition) is based on things/commentary like this:

• SoftBank removed the Ingenuity deal from the table, which was not necessary and QIA bought their position at a similar time (in business terms)

• At a similar time, MM put his property portfolio up for sale

• Iain McDonald responded to an MM post, with something about ….going somewhere where the business would be appreciated. I now can’t find this post, so am wondering if it was deleted (I may not be looking in the right place though).

• Iain responded to the MM post about shorters, saying that these antics held back companies as they discouraged investment needed to grow etc. this made me think that investment was the challenge at the time.

• At the AGM, when the shareholder asked about whether PI’s would not be forgotten in any deal….MM basically said that if we stick with him, it will be ok. But as he kept talking, he made a reference to the longer-term. Can’t remember exactly what he said….but I struggle to see how PI’s could be here for the longer term, if we are forced to sell.

I am now wondering if the investment (if there is one) may come from Autostore, which is/was 40% owned by SoftBank(2021).

All just adding to the debate. Would welcome other view’s please.

As I have said, I believe a capital event akin to the SoftBank deal is likely. But, I acknowledge that there are a number of posters on here with far more experience than I, in this type of market activity.

I would therefore be very grateful, if those with a clear experienced/educated view, would be kind enough to share their thoughts on what the future may look like….taking recent news into account (especially yesterday’s news).

Many thanks in advance to anyone willing to share.

I believe Oke said on another board that he sold half his THG holding and has a “free ride” with the other half….or something to that effect…

For 120m I recon he could buy circa 11% of THG at around todays prices. It would have been around 1.85% at the £5 float price. Crazy.

Great find!

We’ve said there was a plan for a while.

This was in the press last year: https://www.retailgazette.co.uk/blog/2022/09/thg-explores-sale-of-cheshire-offices-after-shares-down-95-since-ipo/#:~:text=THG%20is%20looking%20to%20sell,approaching%20property%20agents%20from%20OBi.

Independence Day, so will be interesting to see the pattern of trading around early afternoon.

I believe the golden share was a barrier to incoming investment, hence its removal…..

Sniffing around THG or companies in general?

“It is a game of two halves!” is too cryptic for my simple brain I’m afraid.

I don’t believe that the plan is to sell the business (and retain control) or to have an MBO. Of course I’m not saying that an acceptable bid wouldn’t be entertained, I just don’t believe it’s the plan.

As I previously posted, I now believe that a capital event is most likely, that may involve Ingenuity being separated and listed elsewhere, with operations remaining in the UK. The remainder of the health & beauty business would seek a UK premium listing, if still appropriate. The incoming investment will support a re-rating. Existing shareholders would be allocated shares in the new Ingenuity division.

I’m probably wrong, but I guess time will tell.

Reference:

“He is playing a game be very supised if this appears on Ftse250 ever”

What game is he playing?

If you removed Ingenuity, you would have strength for a premium listing.

“The group’s protein division is generating sales of about £700 million a year, so a £1 billion valuation isn’t unrealistic. It might be attractive to a big food company, such as Nestle SA. THG’s beauty arm also generates more than £1 billion a year in sales, and so that might garner interest too, and cosmetics brands typically change hands for high multiples.

That would leave Moulding and his backers to try to concentrate on generating value from the Ingenuity arm, perhaps working with Autostore Holdings Ltd., in which former THG cornerstone investor SoftBank Group Corp. is the biggest shareholder.”

https://www.bloomberg.com/opinion/articles/2023-04-18/will-apollo-offer-thg-a-route-out-of-its-troubles#:~:text=To%20say%20THG%2C%20formerly%20known,September%202020%20is%20an%20understatement.

THG directors buy in

July 1, 2023 by Cameren Barnes

Since its 2020 IPO, THG shares have dropped by 85%. The e-commerce company, which owns beauty and nutrition brands and provides digital services through its Ingenuity division, has consistently disappointed the market with profit warnings and concerns regarding corporate governance.

Recent updates to the board have addressed some of the governance issues, although shareholder dissatisfaction remains. Co-founder and CEO Matthew Moulding has relinquished his “special share” arrangement, which granted him veto power over takeovers. The share will be canceled.

The board has also strengthened its composition by appointing Helen Jones, the remuneration committee chair of Premier Foods and Fuller, Smith & Turner, as an independent non-executive director. However, concerns persist regarding Iain McDonald, the founder and chief investment officer of Belerion Capital, who was involved in a potential bid for THG in 2022. McDonald has stepped down from the remuneration committee, but a significant percentage of votes at the company’s annual general meeting expressed independence concerns for his re-election to the board.

In a pre-AGM trading update, THG reported a “strong” second quarter and maintained its guidance. Management expects adjusted cash profits for the 2023 financial year to align with the analyst consensus of £118.5mn, indicating a margin of 5.3%.

Liberum analysts believe that margin improvement is attainable due to significant tailwinds from declines in whey prices, which should fully benefit the company in the second half of the year, along with ongoing cost reduction efforts.

Board members also display confidence in the prospect of share price improvement. Co-founder and COO John Gallemore bought £448,000 worth of shares jointly with his wife on the same day as the AGM. Non-executive director Sue Farr and her husband purchased a total of £50,000 worth of shares the following day.

https://vigourtimes.com/directors-transactions-ceo-offloads-some-bytes/

I first bought at £2.84 and averaged down to 84p.

I’m staying put until we achieve somewhere near fair value, which I feel is somewhere between £2 and £2.50, as it stands…but if market forces change and THG regains confidence, who knows what the future holds….

I feel like a capital event to support Ingenuity growth, like considered by SoftBank but at a realistic value, may well be a way to realise fair value for all divisions. Depending on who the partner would be, Ingenuity could be listed independently elsewhere (Qatar Stock Exchange?), leaving THG Health & Beauty listed in the UK under a premium listing.

Just another option for the melting pot.

I’ve been traveling a lot this week, so lots of thinking time….and rightly or wrongly, I’m now leaning towards a capital event similar to the SoftBank deal (that is now gone), and the golden share removal was a condition to confirmation.

Like many others I’m happy to hold long term and after a good week, I’m nearly at break even.

Rhetorical questions really …..

The point I’m making I suppose is that these launches are a barrier to entry for food companies looking to enter the health & wellness space…and believe me, it’s a hot topic right now.

The market is changing so rapidly, and the cost of launching a brand is so great, that it would be easier and cheaper to purchase a competitor than try yourself.

A 3 year development pipeline is not unrealistic for a brand. What impresses me, is that they had the insight to see this market gap 3 years ago and no one of scale has entered the market in that time. If the innovation pipeline is already structured, in development and almost deliverable, the competition will have little time to react.

Just my view as always.