Kelso Group (LSE:KLSO) said it has increased its stake in THG PLC (LSE:THG) and highlighted what it sees as “significant intrinsic value” of the Hut Group owner’s nutrition business.
The newly formed activist investor’s stake was increased to 8mln shares with an increase in the value of its contracts for difference (CFD), following THG posting its full-year results earlier this week and the preliminary bid approach from private equity group Apollo.
Within those results, Kelso noted that THG announced sales for the nutrition business, including MyProtein, of around US$800mln for last year (actually £675.1mln or US$838mln).
Kelso noted that listed pure play global health nutrition companies Celsius Inc and Bellring Brands Inc, with respective sales of US$654mln and US$1.4bn, trade for 10.8 and Bellring 3.9 times sales, respectively.
It said: “Matthew Moulding, the CEO and founder of THG, has consistently tried to explain the true value of the nutritional business. In addition, the food and beverage companies we refer to above have vast offline global distribution networks that could significantly increase the offline sales of MyProtein. In return, we strongly believe, that MyProtein's direct to consumer digital model would be highly attractive to many of these companies.”
It added that “any forthcoming offers for THG as a whole must clearly reflect this underlying value and in the event that an acceptable offer is not forthcoming then a separation of MyProtein should be considered, alongside a potential partnership and minority investment from companies such as those highlighted”.
Kelso will publish results next week, when it will also provide an update on its proposed £3mln placing, where it expects current shareholders to subscribe for the majority of the raise.