Two investment firms are set to abandon their pursuit of ecommerce retailer THG, presenting a fresh setback for the company’s investors.
The Manchester-based group said last month that Belerion Capital and King Street Capital Management had made an “unsolicited, highly preliminary and indicative non-binding proposal” of 170p a share, or around £2bn.
The overture was rejected as inadequate but making it public set the clock ticking on a “put up or shut up” deadline of June 16 under UK takeover rules.
A person familiar with the approach said a formal statement confirming withdrawal was likely on Thursday. The parties may not then make a further approach for six months, unless another party tables a bid.
Belerion is already a shareholder in the group and Iain McDonald, its chief investment officer, has been a non-executive director since 2010. Belerion and King Street both declined to comment, as did THG.
Their intention to abandon their pursuit was first reported by Bloomberg News.
THG shares climbed after the approach became public but never reached the 170p bid price, suggesting investors were sceptical about a firm offer materialising or the company recommending its acceptance. THG co-founder Matt Moulding still holds a “special share” giving him power to veto any hostile takeover, although he has pledged to relinquish this.
The shares have since fallen back and closed on Wednesday at 104p, mirroring a wider retracement in both technology and retail stocks amid worries about the impact of inflation on consumer spending. The group floated in September 2020 at 500p a share and the stock reached 800p in the aftermath of the IPO.
Bid speculation has rarely been far from THG since the shares began to fall last summer. That pace of decline picked up after an investor day in October that left many with concerns about the company’s governance and strategy.
The company said at the time of its full-year results that it had received various “unacceptable” proposals.
Candy Ventures, an investment group controlled by property tycoon Nick Candy, is also subject to the June 16 deadline. It said in May it was “in the early stages of considering a bid” for THG but did not respond to requests for comment.
It usually invests in small companies quoted on London’s junior stock market and few analysts expected it to make a firm bid for THG, which is capitalised at £1.28bn.