Online retail company THG has rejected a bid for its Myprotein business worth up to £600 million from a firm led by its former director.
THG, which also owns Cult Beauty, said it rebuffed a “largely unfunded” and “highly conditional” approach from Selkirk – a firm set up by two early backers of THG, including Iain McDonald, a previous non-executive director at the firm.
The cash-and-shares proposal valued Myprotein at between £400 million and £600 million, according to THG.
Shares in THG lifted more than 4% in early trading on Wednesday.
The majority of the approach was funded by newly issued shares in Aim-listed Selkirk, but THG said the remainder “would have been payable in cash from a new equity and debt issuance, which was largely unfunded and without appropriate detail on its source”.
THG said: “The board considered that the proposal fundamentally undervalued Myprotein and its prospects, and in addition carried significant execution complexity and risks, in particular the ability of Selkirk to raise sufficient funding.
“On this basis, the proposal was unequivocally rejected by the board.
“THG confirms that there has been no further engagement with Selkirk since the proposal was rejected.”
Selkirk is a shell investment vehicle that floated last November, having been founded with funds from Kelso – an activist investor and major shareholder in THG.
THG, which is due to post first quarter figures next Wednesday, said it had reduced debt and secured long-term banking facilities since spinning off its Ingenuity technology platform and distribution business at the start of the year.
THG revealed in January that revenues across the remaining business were down 5% at £493.7 million for the three months to December 31.
Its performance was dragged down by continued weakness in its nutrition business, although it highlighted “improving” demand for the rest of the financial year.
The firm demerged Ingenuity, which works closely with warehouses to manage online sales, in order to focus on its core beauty and nutrition businesses.
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