THG shares plunge as online retailer ends takeover talks with Apollo
THG shares plummet as online retailer ends takeover talks with private equity candidate Apollo after rejecting ‘inadequate’ offers
- THG said there was “no longer any merit” in continuing the discussions
- Apollo also said it no longer plans to make a bid for the company
- THG shares plunged as much as 20% in early Friday trading
THG shares plunged nearly 20 percent after the struggling online retailer said it had ended takeover talks with private equity giant Apollo.
The company’s board of directors told investors Friday it had “zero merit” in continuing talks after THG rejected the latest buyout proposal, which it said was based on “inadequate valuations.”
The company behind the websites Lookfantastic and Myprotein, formerly known as The Hut Group, received a preliminary offer from Apollo on April 17.
Talks collapse: THG said Apollo’s offers were based on inadequate valuations
The private equity firm had until May 15 to make a final offer or walk away, but THG said it was not in its best interest to seek an extension of that deadline.
THG shares rose more than 40 percent last month when it received the preliminary takeover proposal, but fell as much as 18 percent in early trading before recovering some losses to fall 12 percent to 66 pence.
The move follows months of speculation over the future of THG, whose shares plummeted 85 per cent following its £5.4 billion IPO in 2020, with the company now valued at just £844 million.
“It has become clear to the Board of Directors, supported by shareholders representing a majority of THG’s issued share capital, that it no longer makes sense to continue with Apollo,” THG told investors today.
Consideration and rejection of the indicative proposal was on a basis consistent with all previous bids for the company, some of which were public matter, which were also rejected based on inadequate valuations and the nature of those bid structures.
“After consultation with its financial and legal advisers, the Board has unanimously decided that it is not in the best interests of THG shareholders to seek an extension of the deadline.”
In a separate statement, Apollo also announced that it no longer intends to make an offer for the company.
THG has suffered several setbacks since going public in London, with the company nearly tripling annual losses to £550 million last year.
But this hasn’t deterred activist investor Kelso, who last month increased his stake in THG, saying he believes in the “significant intrinsic value” of the e-commerce company’s food arm.