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  • Writer's pictureMark Watson-Mitchell

THG – don’t bite the hand that feeds

Well it is no surprise that Matt Moulding, boss of THG (LON:THG), has yet again come out with some sniping comments about the City.

It appears that he considers it to be full of sharp-suited gangsters waiting to rip everyone off.

Of course, he may well be right.

Terminated discussions

The latest tirade from Moulding follows the news early on Friday morning that his beauty and nutritions e-retail specialist had rejected the approach from Apollo Global Management.

The US-based fund management group, which handles some $598bn of funds under management, in mid-April made an approach to THG with a view to a possible bid for the company.

The ensuing discussions were terminated by THG on the grounds that such an offer could well be based upon inadequate valuations and complex financial structures.

Hectic dealings

The group’s shares, which touched 118p less than two weeks ago, fell to a low of 55p in immediate market response, before bouncing during the day up to 71.62p and then closing that night at 62.90p.

That was after a hectic 40,020,175 shares were traded, compared to the recent daily average volume of 10,398,116 dealt.

Moulding’s comments – it all sucks

The Daily Mail reported on Saturday that Moulding, who in the past has said that THG’s time on the stock market has just “sucked from start to finish,” added on Friday that “it is unpleasant being listed in London.”

In commenting upon the financial structuring of the Apollo Global approach being based upon smart financial engineering.

He remarked that the Apollo bid was aimed to capitalise on the online retailers wildly low share price.

Moulding has blamed the previous share price fall on hedge funds, the media and analysts.

Furthermore, he yesterday claimed that Numis Securities had led ‘short attacks’ after they were not made a broker to the company.

Private Equity interest aplenty

The Daily Mail reported that Moulding stated:

“It’s well known that PE (private equity) deals are lucrative for management. THG would be worth billions more away from the daily market manipulation involving bankers, hedge funds and pundits.”

He went on to add that:

“Just about every major PE firm has enquired about taking THG private but usually nobody finds out.”

I was particularly intrigued to note that on Saturday morning the Daily Telegraph reported that Mr Moulding said Apollo moved to raise its offer ‘yesterday’, with THG’s Ingenuity arm now viewed by the private equity firm as ‘significantly more valuable than the whole of THG the day before their bid leaked last month.

Broker comments – misery and hyperbolic rhetoric

Russ Mould, investment director at AJ Bell, commented that:

“Investors hoping a takeover would put both them and the company’s torrid existence as a public entity out of their misery will be disappointed.”

Elsewhere, Clive Black at Shore Capital is reported to have said that he was amazed that Apollo had even looked at THG.

He said that although he is a big fan of entrepreneurship, it would put everyone out of their misery if Moulding were to take it off the market.

Black also added “that all the stuff about Ingenuity was ramped up hyperbolic rhetoric that was beyond belief – it was nonsense and ended in tears.”

Conclusion – short covering and renewed analysis

As for City gangsters, well it is worth reminding Moulding that he convinced the City that his group was worth £5bn plus when he floated it in September 2020, taking over £900m into his personal pot in the process, while allowing him a ‘golden share’ and the ability to take some £15m a year in rents from the group.

Sniping at the City is never a good idea – it is far bigger than ever you may think you are. It is best to stay quiet and to never bite the hand that has fed you millions.

The shares went from 500p up to almost 800p within months.

Since then, the massive loss-making group, which loses over £1.35m a day, has seen its shares collapse to 31p.

Before the 17th April announcement of Apollo’s approach they had climbed to 66p. The approach announcement saw them shoot straight up to 97.74p that day.

The question now is what is going to happen to the shares?

It would be reasonable to expect some further unsettled dealings over the next few days, especially as the horde of ‘bears’ start covering their positions.

On the other hand though I would also expect further studied analysis from any one of the PE players upon just what THG could offer them if they made an approach for the entire equity.


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