Shares in THG (THG.L) sank over 6% on Monday after reports that two private equity firms were mulling a potential takeover of the company.
Advent International and Leonard Green are both reportedly considering a move on the embattled e-commerce group formerly known as The Hut Group, with executives from Advent recently visiting its offices in Manchester, the Sunday Times reported.
The group’s shares jumped as much as 16% on Friday after news of the approaches first emerged, but are back on the decline on Monday.
There has been speculation about a takeover of the British e-commerce group since last year when boss Matt Moulding suggested in an interview with GQ Magazine that he might be interested in quitting the stock market following the company’s float.
THG shares have tumbled more than 80% since it listed in London in 2020, with Moulding blaming the decline on short-sellers.
So far, neither THG or the private equity firms have made any statement about the takeover interest.
The company, which is behind online brands such as Cult Beauty, LookFantastic and Myprotein, sells beauty, skincare and health food products across hundreds of international websites.
The news comes after THG warned its full-year profit margin would miss expectations in January.
The Manchester-based firm, said at the time that its earnings before interest, tax, depreciation and amortisation (EBITDA) margin would come in between 7.4% and 7.7%, below the 7.9% expected. This was due to fluctuating foreign currency movements.
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However, the group still posted its highest ever annual sales of £2.2bn ($3bn) thanks to significant growth during the Christmas period and a rising demand for beauty products.
THG said the new year had “started well” but pointed to further challenges ahead as it faces tough comparisons from a year ago when the UK was in lockdown. It is also facing record commodity prices and the knock-on effect on its nutrition division, as well as uncertainty from the pandemic.
Group sales rose 92.4% on a two-year basis in the fourth quarter to 31 December, while Q4 sales were up 27% to £711m, compared against the same period a year ago
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