LONDON — Ted Baker isn’t the only British company that’s attracting private equity bargain hunters.
The Hut Group, which has seen its share price plummet 83 percent in the past year, has also received “indicative proposals from numerous parties in recent weeks,” according to the company’s cofounder and chief executive officer Matthew Moulding.
Moulding told investors earlier this week during THG’s full-year results presentation that he and the board knocked back all of the offers as they don’t reflect the value of the company.
“The board has concluded that each and every proposal to date has been unacceptable, failing to reflect the fair value of the group, and confirms that THG is not currently in receipt of any approaches,” he said.
Moulding did not elaborate on who the suitors were, what price they offered, or even how serious those offers were.
According to British press reports, the top suitors are American private equity giants Leonard Green & Partners; Advent International, and Clayton, Dubilier & Rice. They have not commented on the speculation, nor has anyone made a formal offer.
THG shares are currently trading at 1.09 pounds.
Beauty industry sources confirmed that THG is a very attractive target given the share price decline, the governance challenges it has been experiencing of late and the potential for growth.
THG landed on the London Stock Exchange with a blockbuster initial public offering in September 2020, but the share price began to fall after questions arose about cofounder Moulding’s powerful role and oversight.
Until recently he was chairman, chief executive officer and in possession of a “golden share,” which gives him special veto powers and the ability to block takeover attempts. In addition — via a series of complex deals — Moulding is also THG’s main landlord through a separate investment company.
Moulding has since ceded the role of chairman to former ITV boss Charles Allen, and has said he plans to give up his golden share. He remains CEO.
Adding to THG’s woes, analysts have also questioned the value of the company’s Ingenuity platform, which licenses end-to-end e-commerce solutions to brand owners, provides various other digital services and undertakes beauty product development and manufacturing for third parties.
Earlier this week, THG said full-year revenue in fiscal 2021 was 2.2 billion pounds, up from 1.6 billion pounds in 2020. Adjusted EBITDA was up 6.6 percent to 161 million pounds. THG added it was expecting “strong” revenue growth in 2022, ranging from 22 to 25 percent.
In the meantime, Ted Baker, which also saw its share price plummet due partly to governance issues, continues to field offers after putting itself up for sale earlier this month.
As reported, Sycamore Partners has confirmed it is taking part in the formal sales process after having made a series of unsuccessful bids for Ted Baker earlier this year.