THG shares slump as takeover prospects recede

By

Nigel TAYLOR

Published
May 5, 2023

THG’s rollercoaster ride is on a downward trajectory for now with news the digital retailer’s potential takeover deal is now in question, sending its shares down 20% on Thursday.

Last month, US private equity giant Apollo Global Management said it was interested in taking THG private, but research from Bloomberg Intelligence now suggests a deal is unlikely to be completed.

Apollo Global has until 15 May to either make a firm offer or walk away.

The doubts arose after the research from Bloomberg Intelligence appear to have spooked some investors resulting in the group's share price plunge. 

The research said it seems unlikely that THG would accept a takeover bid and for Apollo to make a profit based on its sum-of-the-parts valuation. 

It said: "This makes us question the viability of Apollo's takeover intentions.”

But Bloomberg Intelligence added: "Structural beauty and nutrition sector growth and low profitability are propounding the case for a breakup.”

There had already been questions raised about whether THG and its investors would accept an approach from Apollo given that it has already turned down other offers and management seems to believe that it’s heavily undervalued at present.

But there’s clearly a belief that more offers will come and one might be accepted. In response to the research and the sharp fall in THG's share price, activist investor Kelso Group called into question its conclusions and said it believes that “multiple potential parties” could be “assessing THG as a whole or in part”.