THG PLC (LSE:THG) has confirmed that it rejected a cash and shares bid of up to £600 million for its MyProtein business from London-listed acquisition vehicle Selkirk Group PLC (AIM:SELK), which is run by a former director and backed by ex-Tesco boss Sir Terry Leahy.
The FTSE 250-listed group said the proposal was "wholly unsolicited, largely unfunded, highly conditional and non-binding", mostly made up of shares in the shell vehicle, which floated last November.
Selkirk was founded with funds from major THG shareholder Kelso Group Holdings PLC (LSE:KLSO) and run by two early backers of THG, including former chairman Iain McDonald. Angus Monro, another Selkirk director, was THG's chairman before it floated.
It valued the business at between £400 million and £600 million on the protein shakes maker on a cash-free, debt-free basis.
THG's management said they felt the bid "fundamentally undervalued Myprotein and its prospects" as well as carrying "significant execution complexity and risks".
With doubt also cast on Selkirk's ability to raise sufficient funding, the board has not continued talks.
THG, which is due to post a first-quarter update next week, said it has reduced debt and secured long-term banking facilities since spinning off its Ingenuity arm at the start of the year, with a priority on its growth and cash generation strategy.
Shares in THG rose 5.5% to 30.65p in early trading on Wednesday.
House broker Peel Hunt said its base valuation for THG Nutrition was £775 million, equivalent to 1.2 times revenue and 12.8 times EBITDA.
** Update: Adds share price and broker comment **