(Bloomberg) — THG Plc’s stock rose after key shareholder Softbank Group Corp. offloaded its stake in the struggling British online shopping firm to co-founder Matthew Moulding and Qatar Investment Authority.
(Bloomberg) — THG Plc’s stock rose after key shareholder Softbank Group Corp. offloaded its stake in the struggling British online shopping firm to co-founder Matthew Moulding and Qatar Investment Authority.
In a move that further cements Moulding’s control of THG, the Japanese group finally ended speculation about its disastrous investment, writing off as much as as £450 million ($511 million) of a stake that was once valued at about £500 million. THG stock rose 10% in early trading Tuesday before paring back slightly.
The Japanese group’s investment vehicle SB Northstar became a cornerstone investor in THG in May 2021 as part of a £1 billion fund raise.
While it is unclear exactly how much Softbank lost on the deal it is selling its stake for just £31 million, according to a statement Monday. The QIA, already a shareholder, will purchase about 84% of the shares, and the transaction is expected to take place on Oct. 20.
Founded in 2004 by Moulding and John Gallemore, THG, formerly known as The Hut Group, started out selling CDs but today operates hundreds of websites offering beauty, skincare and health-food products as well as helping rivals sell online via Ingenuity.
The shares have fallen 80% this year as investors question the company’s business model and governance controls. THG issued a profit warning last month on weaker consumer appetite in the UK and higher costs for raw materials like whey used to make the retailer’s protein shakes.
Takeover speculation has constantly swirled around THG after Moulding said he regretted floating the company and hinted he may take the business private again. The co-founder has kept a tight grip on THG as a major shareholder, landlord and chief executive officer and only relinquished the role of chairman in March. Now, by growing his stake, he has strengthened his hold on the company once again.
“The further increase in Moulding’s stake and by QIA may very well increase rumours that THG will be subject to a potential management buyout or public-to-private,” transaction, said Wayne Brown, an analyst at Liberum.
Softbank deal
After THG’s successful £5.4 billion float, SoftBank struck a deal with the company, which included an option to buy a 20% stake in its Ingenuity business at a lofty valuation of £4.5 billion. However, amid skepticism about the growth prospects of the unit, SoftBank said in July it would not take up the offer.
Moulding thanked SoftBank for its support in a statement and said THG expects to benefit from relationships formed across the investor’s technology portfolio. Softbank declined to comment.
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SB Northstar, a trading vehicle set up by SoftBank founder Masayoshi Son, was set up in 2020 and aimed at using the company’s excess cash to make some money picking stocks. Son took a personal 33% interest in the unit, while the company held the rest of the equity.
However, the unit has been hammered by falling tech stocks. SoftBank said it would recognize a loss of 670 billion yen ($4.5 billion) for the last fiscal year, with Son on the hook for 315 billion yen.
(Updates with share graph, analyst comment)
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