For some time, Matt Moulding has had the final say on decisions at THG, the company he founded in 2004 and currently leads as CEO.
However, today’s news that he is relinquishing his much-criticised 'golden share', which gave him the right to veto hostile bid approaches, may be a sign that his grip is loosening, and firmly puts THG back in the shop window.
This isn’t the first time Moulding, who owns 14% of THG, has claimed he will give up some control at THG since the company first floated in London over two years ago.
In October 2021, he said he would give up his golden share to regain confidence in The City after a sharp fall in share prices.
Two years ago, the aim behind the action was to regain confidence among investors, although seemingly it never materialised after failing to achieve a premium listing.
Today, Moulding’s intentions may be to unofficially put THG back in the shop window, and now may be as good a time as ever.
In a statement ahead of its AGM, THG said a “significant increase” in first-half profitability is expected, with adjusted underlying earnings (EBITDA) in the range of £44mln to £47mln, while it also remains on track to deliver free cash flow neutrality.
Shares bounced on the news, gaining 7% to 78.3p.
Who would buy?
The most obvious buyer of THG is US private equity firm Apollo, which was sniffing around last month before a bid was eventually rebuffed.
While THG’s official statement at the time stated that the decision to end talks with Apollo last month was one made by the board and supported by shareholders, the private equity firm will no doubt see this as an opportunity to sway heads at the board of THG.
UK valuations have plummeted over the last year due to macroeconomic factors, and foreign investors are sniffing bargains.
Time will tell if Apollo swoops back in for THG, but don’t rule out other private equity firms sniffing in London again.
Other US private equity firms will no doubt also be sniffing about, with data from law firm Mayer Brown suggesting that US private equity firms increase the number of UK acquisitions by 35% in the year 2022/23.
THG was not available for immediate comment.