THG PLC – Termination of discussions with Apollo

On April 17, 2023, THG publicized the receipt of an initial, non-binding proposal from Apollo Global Management Inc. (“Apollo”), representing some of its associated funds, to acquire all existing and forthcoming shares in THG (the “Indicative Proposal”).

After receiving the proposal, THG’s Board initiated brief discussions with Apollo to potentially enhance the offer’s valuation and confirm the proposal’s structure.

However, the Board, backed by the majority of THG’s shareholders, has concluded that further engagement with Apollo is unwarranted. The Board reviewed and dismissed the Indicative Proposal in line with previous offers for the Company, some of which are publicly known, and were also rejected due to unsatisfactory valuations and proposal structures. After consulting with its financial and legal counselors, the Board unanimously agreed that extending the deadline set in the announcement on April 17, 2023, as allowed by Rule 2.6(c) of the Code, is not in THG shareholders’ best interests. Hence, all conversations with Apollo have ended.

THG affirms that the improvements in profitability and cash flow seen in Q1 of FY 2023 have persisted into Q2, with continued online sales momentum supporting the Board’s yearly guidance. The measures taken by management since early 2022 to enhance operational leverage, reduce capital expenditure, and increase working capital efficiencies, along with a continuous drop in whey commodity prices, significantly bolster profitability and cash flow neutrality in FY 2023. THG reemphasizes its anticipation to generate positive free cash flow in FY 2024 and to maintain adjusted EBITDA margins around 9.0% in the medium term.

Since Lord Allen’s appointment as an independent Chair in March 2022, THG’s Board composition continues to evolve, aligning with its independence and diversity goals, with three additional independent non-executive Directors, including the recent appointment of Sue Farr as Senior Independent Director. Following the completion of a divisional reorganization and subsequent strategic review, including segment performance publication, the Group now possesses various strategic options to optimize shareholder value across the Nutrition, Beauty, and Ingenuity divisions. The transition to the Premium segment of the Main Market of the London Stock Exchange still depends on the FCA’s review outcome for the listing regime reform.

Charles Allen, Lord Allen of Kensington, Chair of THG, commented on the announcement, stating that THG’s Board is fully committed to considering all potential options that could enhance value for THG’s shareholders while maintaining confidence in THG’s strategic direction and long-term prospects as an independent company. He highlighted the company’s robust financial position and leadership within significant global markets that continue to benefit from long-term structural growth, reinforcing the company’s commitment to deliver long-term value to shareholders and achieve positive cash flow by 2024.

In accordance with Rule 2.6(a) of the Code, as mentioned in the April 17, 2023 announcement, Apollo has until 5.00 p.m. (London time) on May 15, 2023, to either declare a firm intention to offer for THG following Rule 2.7 of the Code or to announce that it will not be making an offer, which will be interpreted as a statement under Rule 2.8 of the Code.

James Pochin, General Counsel and Company Secretary is responsible for the release of this announcement on THG’s behalf.

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