(Bloomberg) — THG Plc stock soared after the embattled online shopping emporium rejected a 2.1 billion-pound ($2.6 billion) offer and drew interest from acquisitive entrepreneur Nick Candy.
The Manchester-based business rebuffed a proposal of 170 pence a share from UK e-commerce investor Belerion and US hedge fund King Street Capital Management, saying it significantly undervalued the company. Its rejection late on Thursday came just minutes after Candy, a property developer-turned-technology investor, announced he was mulling a bid for a company that has endured a dramatic decline in its share price since floating in 2020.
Shares in THG were up more than 26% at 8:47 a.m. in London Friday.
It is the latest development for a company which was a stock market darling when it floated, attracting investment from SoftBank Group Corp., but has since been dogged with concerns about its governance and the growth prospects of its Ingenuity unit, a platform which helps brands sell their products online.
THG’s founder Matthew Moulding said in November that he regretted floating the company and fueled takeover speculation by hinting he may take the business private again.
Formerly known as the Hut Group, the retailer was started by Moulding and John Gallemore, who now serves as chief financial officer, in 2004. It began selling CDs but today operates hundreds of websites selling beauty, skincare and health-food products as well as helping rivals sell online via the Ingenuity division.
Moulding has kept a tight grip on THG as a major shareholder, landlord, chairman and chief executive officer. In March, THG appointed Charles Allen as chairman, with Moulding relinquishing the role to focus on being CEO. Moulding also pledged to give up his golden share, which allows him to veto a takeover, smoothing the way for THG to move its listing to the premium segment of London’s Stock Exchange.
THG said last month it had received approaches from parties looking to acquire the online shopping emporium, but none were acceptable.
Belerion is an investment advisory firm that specialises in e-commerce and technology investing. It was founded by Iain McDonald, who is currently a non-executive director on THG’s board. McDonald has previously worked at investment banks Numis and Charterhouse and worked as the chief investment officer at the William Currie Group.
King Street was founded in 1995 and has $20 billion of assets under management.
The consortium has until June 16 to make a firm offer for the business or walk away under UK takeover rules. Candy Ventures Sarl, the holding company for Candy, also has until then to decide whether to make an offer.
Candy is best known in the UK for working alongside his brother Christian in driving the development of the One Hyde Park luxury residential development in London’s exclusive Knightsbridge district.
Since then he has invested in a number of companies, including technology businesses. He built up a stake in podcasting platform Audioboom Plc, which has been the subject of takeover speculation, as well as scooping up augmented reality startup Blippar after it went into administration. He was part of a consortium that failed in a bid for Chelsea Football Club earlier this year.
(Updates with additional information on Belerion Capital in ninth paragraph)
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