THG receives takeover proposal from US buyout firm Apollo

Online beauty giant THG, parent of Cult Beauty and Lookfantastic, has revealed it has received an initial takeover proposal from US buyout firm Apollo.

The company, which was previously called The Hut Group, saw shares surge by over 40% to 86.5p as a result. Nevertheless, the firm’s stock is still down by over 80% since it floated on the London stock exchange at a valuation of £5.4 billion in January 2021. The group had a market valuation of around £1.2 billion after the takeover interest was confirmed.

In a statement on Monday, THG said it has received a “highly preliminary and non-binding indicative proposal” to acquire the whole business. However, it did not disclose the terms or valuation of the proposal.

“There can be no certainty that any firm offer will be made,” the company added. “A further announcement will be made if and when appropriate.”

Apollo must announce whether it plans to make a firm offer or walk away by a deadline of 15 May, in line with takeover regulations.

The approach comes two months after the latest profit warning by THG, which also launched a strategic review into loss-making parts of its OnDemand division, which includes websites such as Zavvi and Pop In A Box, as it seeks to focus further on beauty and nutrition.

The Manchester-based business was founded by Matt Moulding and John Gallemore in 2004. It has grown through a raft of acquisitions of online retail brands in beauty and wellness, such as Myprotein and Cult Beauty, but has seen its valuation tumble in the past two years as cost inflation has impacted profitability and the firm has faced scrutiny over its corporate governance.

Last year, the company received a £2.1 billion takeover approach by a consortium led by Belerion and King Street Capital Management but rejected the move. The suitors walked away from talks soon after while interest from British property developer Nick Candy also fizzled out.

The approach from Apollo comes as the US private equity business continues with its efforts to buy London-listed oil and gas engineering firm John Wood Group for £1.7 billion.