Penny for Matt Moulding鈥檚 thoughts.
THG鈥檚 CEO and founder isn鈥檛 normally backwards about coming forwards when it comes to sharing his opinion聽 but he鈥檚 not yet commented on Selkirk鈥檚 preliminary bid of between 拢400m-拢600m for THG鈥檚 prime asset Myprotein.
The fact that Moulding has previously described the man making the bid 鈥� former THG director Iain McDonald 鈥� as his 鈥榓nchor鈥� is an added subplot.
THG gave the bid short shrift, describing it as 鈥榳holly unsolicited, largely unfunded and highly conditional鈥�.
The nature of the emphatic rebuff raised a few eyebrows but could there be more to it than meets the eye?
Before we answer that a quick recap.
THG 鈥榰nequivocally rejects鈥� bid for Myprotein from former director
It would be disingenuous to suggest Myprotein is THG is but there鈥檚 no disputing that the brand is an integral part of the online retail giant鈥檚 overall business.
It was back in 2011 that THG (then called The Hut Group) announced its entry into the fast-growing sports nutrition market by buying Myprotein.com for a bargain 拢58m.
Myprotein, which was founded by Oliver Cookson in 2004, is now an established global brand and is a pivotal part of the wider THG Nutrition.
Earlier this year THG de-merged its loss-making tech arm Ingenuity from the profitable bits – Beauty and Nutrition.
THG Nutrition had a tough first half of 2024 with revenues down 7.5 per cent to 拢299m, blamed largely on a rebrand and currency headwinds.
Despite that THG Nutrition, complete with Myprotein鈥檚 readymade global reach, would have obvious appeal to a purchaser.
All of which brings us back 聽to this week鈥檚 rejected bid worth 拢400-拢600m from former director Iain McDonald.
McDonald 鈥� an early investor in ASOS 鈥� is the executive chair of Selkirk Group PLC, a shell company founded last year.
In March 2024 he stepped down from the board of THG after 14 years with a gushing tribute from Moulding ringing in his ears.
鈥淭here鈥檚 no doubt whatsoever that THG would not be in such a strong position as it is today had Iain not joined us 14 years ago,鈥� Moulding wrote.
鈥淚n this world of relentless chaos, I rely on a small group of 鈥榓nchors鈥� to keep me and THG steady. Iain is one such anchor.鈥�
The two appear to have remained on good terms, evidenced by the fact that McDonald鈥檚 last post on LinkedIn was to congratulate Moulding and his co-founder John Gallemore on the 20th anniversary of THG.
鈥淵ou鈥檙e a great team and both a pleasure to work with,鈥� he wrote. 鈥淎 monumental achievement in 20 years, I鈥檓 very proud of both of you.鈥�
Moulding is known to value loyalty, which is why McDonald鈥檚 attempts to prise the nutrition brand away from THG via Selkirk have put the proverbial cat amongst the pigeons.
Selkirk, which floated in November, was formed to acquire undervalued companies or businesses in the consumer eCommerce, technology and digital media sectors.
It has the backing from Angus Monro, a former non-exec director at THG, and former Tesco CEO Terry Leahy.
It is also backed by McDonald鈥檚 Belerion Capital as well as a subsidiary of Kelso Group, an activist investor that targeted the removal of THG chair Lord Charles Allen last year over his 鈥榣ack of action and clarity鈥�.
In dismissing Selkirk鈥檚 approach, THG said: 鈥淭he majority of the consideration offered was in the form of newly issued Selkirk shares, and the remainder of the consideration would have been payable in cash from a new equity and debt issuance, which was largely unfunded and without appropriate detail on its source.
鈥淭he 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.
鈥淥n 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.鈥�
The precise value of Myprotein is debatable. It sits inside THG Nutrition, which has been valued by one UK investment bank at 拢775m. The same bank indicated that in a bid situation the brand could attract an eye-watering premium price of 拢1.5bn.
However, one industry analyst I spoke to said 拢1.5bn was 鈥榳ay off the mark鈥�, especially when you consider THG鈥檚 market cap is currently just over 拢400m.
鈥淚s it a real bid when two of the people making it are ex-THG?鈥� asked the industry expert.
鈥淚鈥檓 not saying this is the case here but football agents have been known to plant stories to try and secure better deals for their clients.鈥�
Other people I鈥檝e spoken to have scoffed at the suggestion but relationships between Selkirk and THG appear to be cordial.
In a statement Selkirk said they 鈥榬espectfully disagree鈥� with THG but thanked the board for 鈥榗onsidering our proposal鈥� and added: 鈥淢yprotein is a world class brand with tremendous growth prospects, but which is currently dramatically undervalued by the UK market.鈥�
According to Russ Mould, investment director at AJ Bell, 聽we may not have heard the last of the story.
鈥�While THG has rejected Selkirk鈥檚 approach, this might have fired the starting gun for other interested parties to think about making a move,鈥� he said.