THG experiences a surge of over 40% following an approach for an Apollo bid

Shares of THG PLC (LSE: THG) surged by over 40% after confirming a preliminary bid approach from Apollo Global Management (NYSE: APO), contributing to the recent rise in M&A activity in London.

In a statement released on Monday, THG stated that it is uncertain if Apollo will make a definitive offer, as the deadline for a firm bid is May 15.

The online retailer, previously known as The Hut Group, has faced a turbulent time since its 2020 listing due to concerns over governance, the escalating cost of whey, which is used in its protein shakes, and questions surrounding the future profitability of its Ingenuity unit, which assists other retailers in online selling.

Entrepreneur Nick Candy and a rival consortium comprising Belerion Capital and King Street Capital Management withdrew their offers for THG last year.

Earlier this year, THG revealed its plans for a strategic review of its loss-making businesses that fall outside of its core beauty, nutrition, and Ingenuity platforms. With hundreds of websites in operation, the objective of the review is to simplify THG’s business structure.

Furthermore, THG cautioned in January that its profit would be lower than anticipated. The e-commerce group will announce its full-year results on Tuesday.

SoftBank Group Corp., once a major investor in the company, sold its stake in THG last year.

Since its listing, THG shares have plummeted by over 80%, leading some investors to predict further declines. According to data from S&P Global Market Intelligence as of April 13, approximately 10% of the company’s free float is represented by shares out on loan, which is an indication of short interest.

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