US private equity giant Apollo swoops on troubled Hut Group

Shares of the Hut Group rose nearly 50 percent as it became the latest UK firm to be targeted by private equity predators.

The online retailer – now known as THG and owner of websites Lookfantastic and Myprotein – says it has received a ‘very preliminary and non-binding indicative proposal’ from Apollo Global Management.

The move came as takeover fever gripped the city, with oilfield service company John Wood Group and payment provider Network International – both FTSE 250 companies – also in their sights yesterday.

The attack on THG from one of the world’s largest buyout groups follows a torrid time for the company and its founder Matt Molding since going public in London in September 2020.

The shares were trading at 500p and valued it at £5.4bn, reaching a high of almost 800p in early 2021. But they changed hands last year for just over 30 pence and after closing yesterday at 44.9 per cent or 29.66 pence were still worth just 95.76p.

That gave THG – which is publishing annual figures today – a value of £1.2 billion.

Molding (pictured), who poured £830m into the THG fair, has made no secret of his feelings since listing, saying the experience was ‘just rubbish from start to finish’.

He claims to have turned down “numerous” takeover attempts in the past amid speculation he wants to buy back the company he co-founded and has led since 2004.

Under the city’s takeover rules, New York-based Apollo must make a firm bid for the embattled online retailer before May 15 or it will walk away.

Apollo is also chasing oil services group John Wood Group and has seen four offers rejected until next month to close a deal.

Other London-listed companies such as Dignity, Hyve and Dechra Pharmaceuticals have been in the throes of talks over potential takeovers in recent weeks.

The flurry of activity – which follows a wave of post-Covid ‘pandemic looting’ – has fueled fears that British businesses are being bought cheaply.

Danni Hewson, head of financial analysis at investment platform AJ Bell, said: ‘UK equities are a tempting target for private equity looking for a bargain.

“But the trick for intended targets is to make sure they play the game well enough to ensure that British jewels aren’t being sold cheaply.

Playing the game probably won’t be high on the agenda in THG’s boardroom. The e-commerce retailer hasn’t exactly enjoyed its time as a publicly traded company, so news of a takeover bid has probably been welcomed with open arms.

“Moulding has been incredibly vocal about his dissatisfaction with life on the London Stock Exchange, so would-be suitor Apollo will likely find him receptive to a fair offer.”

Activist investor Kelso, who acquired a small stake in THG in January, said it would “monitor this situation closely.”

“The gap between the net asset value and the actual quoted value is huge,” said Kelso CEO John Goold, when asked last week whether THG should be delisted. the gap was not appreciated by public market investors as THG gets back on track in 2023.”

Analysts at Liberum raised their rating for the stock to “buy” yesterday, highlighting “how cheap the shares are.”

It gave THG stock a target price of 220p, well above its current level but less than half its value when it entered the market.

…And that won’t be the end of Apollo’s spree

By means of LEAH MONTEBELLO

Apollo, one of the world’s largest private equity firms, has made its intentions clear in Britain.

On a day when Apollo appeared to be chasing both The Hut Group and John Wood Group, the New York-based buyout firm revealed it is bringing together staff from two London locations to a new headquarters in the capital for its European operations.

Chief executive and co-founder Marc Rowan said: ‘London has always been and will continue to be our European hub.

“It’s a major global financial center with a great ecosystem built around it.” The move suggested that Apollo – whose former boss and co-founder Leon Black left in 2021 due to his connections to convicted pedophile Jeffery Epstein – has further plans in Britain beyond the attack on THG and Wood.

British listed companies are targeted by foreign investors due to their cheap valuations.

Shares in oil services company Wood rose 6.7 per cent yesterday after it said there could be merit in Apollo’s final takeover proposal, which valued it at £1.7 billion.

The Aberdeen-based group told shareholders it will open its books and enter ‘talks’ with the American suitor to secure a fifth and final offer of 240p per share.

Last year, Apollo failed to win educational publisher Pearson in a £6.7 billion deal.

It also lost a bidding war to supermarket Morrisons in 2021 and bookmaker William Hill in 2020.

Former CEO Black left the group due to his long association with Epstein.

A review found that Black had paid the sex offender £128 million for financial advice from 2012 through 2017.