THG (THG.L) shares skyrocketed in early trading after the embattled online retail group rejected “unacceptable” takeover approaches from two investment firms and drew interest from entrepreneur Nick Candy.
On Thursday night, the Manchester-based business rebuffed a 170p a share proposal that valued the company at £2.1bn ($2.6bn) from a consortium led by Belerion Capital Group, saying it significantly undervalued the company.
In April, the e-commerce group, which runs beauty and nutrition websites including Lookfantastic, Cult Beauty and Myprotein, confirmed there had been interest from third parties, adding it was not currently involved in any talks.
That came before property tycoon Candy announced he was considering a bid for the company formerly known as The Hut Group, but did not elaborate on the details of the offer.
“Candy Ventures confirms that it is in the very early stages of considering a possible offer for the entire issued and to be issued share capital of [THG],” the company said in a statement to the London Stock Exchange (LSEG.L) on Thursday.
“There can be no certainty that any offer will be made, nor as to the terms of any such offer.”
THG’s share price, which was down 4% at the close on Thursday, jumped as much as 27% in early trading on Friday following the bid, up 24.6% to 145.1p at the time of writing.
It’s the latest twist in the saga for THG, which has seen its share price plummet since floating in 2020 amid concerns about corporate governance and the company’s growth prospects.
The firm floated at 500p in September 2020, and shares peaked at 837p in September 2021. They were at 80p in early March and stood at 116p prior to Thursday’s announcements.
However, the company’s boss and founder Matthew Moulding said in November that he regretted listing the company, fuelling speculation of a takeover bid to take it private again.
“E-commerce platform group THG was also prey after Candy Ventures announced last night that it was considering an offer for the group and that a consortium of Belerion and King Street had proposed to pay 170p per share in a separate offer,” said Russ Mould, investment director at AJ Bell.
“The fact THG’s shares only jumped 27% to 147.59p — well short of the latter proposal — would suggest the market has little faith in the deal in that price range going through as THG doesn’t want to be bought.”
THG has been attempting to recover from a tough year that saw it draw criticism for allowing Moulding to serve as both executive chair and chief executive, which is against best corporate governance practice.
The group’s board had also signed off on a deal that allowed the boss to snap up a spate of properties before leasing them back to THG for millions of pounds a year.
It comes after the company reported revenues grew by 16% to £520m in the first three months of this year, following a 35% rise in revenues to £2.2bn, helping push adjusted earnings up 7% at £161m.