Boris and muscular billionaire Matthew Molding (R) are in tight shirts but are getting nervous … [+]
POOL/AFP via Getty Images
THG CEO and founder Matthew Molding — dubbed the “buff billionaire” for his rags-to-riches story and athletic physique — wishes he had never taken his company public.
After saying at a conference last year that he shouldn’t have listed in London in September 2020 for a $7.7 billion IPO and that the experience “just sucked from start to finish,” he has battling takeover rumors this week may not have dampened his mood.
While Manchester-based THG powers hugely successful beauty and nutrition websites such as Lookfantastic, Cult Beauty and Myprotein, both THG and Molding have rarely left the headlines, most recently this week, forcing Molding to describe “numerous” acquisition approaches as “unacceptable “Dismiss,” said they undervalued the company at a time when he’d much rather be talking about robust trading.
The company has confirmed that while there has been interest from third parties, the company has not been involved in talks at this time, the real question is where to go now with THG and its tinted titanium?
From backroom to billionaire
It all started in 2004 when resourceful Molding raised $640,000 and formed The Hut Group to sell music and DVDs online. By 2017, the company had grown into one of the UK’s few tech unicorns, worth $3.2 billion and selling beauty and nutrition. In typically contrarian fashion, THG listed on the London Stock Exchange in the midst of the pandemic, with the largest London IPO in years.
But the sparkle quickly faded, and Molding has since had a mixed relationship with critics of his company, scolding the city and financial journalists for their reporting and analysis, and filing a dossier with regulators for what THG described as a coordinated attack on his company’s stock price.
In response to the recent coverage, Molding said the board “had concluded that all previous proposals were unacceptable and did not reflect the fair value of the group and confirmed that THG is not currently receiving any proposals.”
GHG Stocks Way Off Peak
The news sent THG shares up 15% to about $1.41 — but boy did they need it as they are well below the $6.43 IPO price and about 87% off their September peak of $10.76 traded in 2021.
That was just seven months ago.
Since then, THG has been beaten and hurt, particularly for allowing Molding to serve as both chairman and chief executive officer — which violates corporate governance norms. Indeed, THG appears determined to keep raising its head above the parapet, with the board also inking a pre-IPO deal allowing Molding to acquire a number of THG properties before selling them for around $24.4 million US dollars per year leased back to the company. It is said that this is a way to reduce debt.
Increasingly spooked by the turmoil, BlackRock BLK, THG’s largest institutional shareholder with a 10.1% stake, halved its stake in November last year, sending the share value down 9% to a then-record low of $2.53. Molding tried to calm investors’ jitters by hiring headhunter Russell Reynolds to look for a new non-executive chair, with business luminary Charles Allen taking on the role on March 22 in preparation for a prime listing in London Stock Exchange instead of the current standard listing.
THG also appointed an executive at its Japanese lender SoftBank as a non-executive director to dispel doubts about its relationship with SoftBank, which invested $730 million in THG last year.
THG with strong results
The irony is that news of the deals came just as THG confirmed a 35% increase in revenue to $2.8 billion, which helped push adjusted earnings up 7% to $207 million increase. First-quarter results also showed a 16% jump in revenue to $669 million.
Molding said it was a strong performance, above the goals set when THG went public, and he highlighted the strong performance of Ingenuity, a division that builds direct-to-consumer websites for other companies that play a key role in the company’s growth plans.
Referring to the UK IPO, Molding previously said: “Well there’s a reason I should have gone [to the U.S.], and actually I wouldn’t have had a profile that would have suited me. No one would have written about me if I had been listed in the US. But it’s just the way it is. Next year [2022]it will be another lesson.”
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