THG terminates takeover talks with Apollo

THG, the owner of LookFantastic, GlossyBox and MyProtein, has announced that it has terminated acquisition discussions with Apollo Global Management, stating that the firm had undervalued the group.

The UK-based beauty and tech conglomerate initially announced it had been approached for a non-binding offer on April 17, with Apollo seeking an acquisition of its entire issued share capital.

However, upon initiating discussions with the company, THG said there was “no longer any merit in continuing to engage with Apollo”, rejecting its offer based upon “inadequate valuations”.

According to a regulatory filing, THG’s board had unanimously agreed on the matter, deciding that it was not in the best interest of shareholders to seek such an acquisition by Apollo.

THG shares tumble 20 percent following rejection

Speaking on the move, Charles Allen, chair of the company, said: "THG's Board, in accordance with its fiduciary obligations and as demonstrated with its recent engagement with Apollo, will always give due consideration to all potential options which provide the opportunity to maximise value to THG's shareholders.

“The Board remains fully confident in THG's strategic direction and long-term prospects as an independent company.

“As stated in our recent results, with a strong balance sheet and category leading positions within substantial global end markets that continue to benefit from long-term structural growth, we have confidence in our ability to deliver long-term value for shareholders and remain on track to be cashflow positive in 2024."

The LSE-listed company further confirmed that the profitability and cashflow improvements reported in Q1 of 2023 had continued into the second quarter, while actions that have been integrated since the beginning of 2022 were also improving operating leverage.

THG had further carried out a divisional organisation and strategic review in a bid to maximise shareholder value, which it said had provided a full range of strategic options across a number of its divisions.

Apollo’s approach, however, came at a period when THG had reported a drop in revenue in its first quarter this year, and was also facing pressure from one of its shareholders, Kelso, which said there was more the company could do to ensure its share price reflected its value.

Once Apollo’s offer became public, THG shares saw a 40 percent bump, however, following the rejection of the offer they have now tumbled 20 percent.