- Matthew Moulding will lose unilateral hostile takeover veto
- Company set to qualify for premium listing and spot in FTSE 250
- Private equity buyers could return, sparking buyout battle
The founder of THG (THG) is to give up his much-publicised special share, the company announced ahead of its annual general meeting today (21 Jun).
The planned move means founder and chief executive (CEO) Matt Moulding loses certain veto powers at the Manchester-headquartered online health and beauty products business. It also means two things can now happen.
First, the removal of Moulding’s special share will allow the company to qualify for a London Stock Exchange premium listing. This will allow THG to enter popular indices, such as the FTSE 250. THG, which rose 3.5% to 75.52p, is now valued at roughly £1.01 billion, comfortably large enough for a spot in the mid-cap index.
According to Sharepad data, UK chemicals business Synthomer (SYNT) is the FTSE 250’s smallest company with a market capitalisation of £342 million. Cruise operator Carnival (CCL) is the largest, worth £14.6 billion.
Joining the FTSE 250 would see large numbers of mid-cap tracker funds and ETFs forced to buy stock, while it may make the shares attractive to some active managers who have not previously been able to invest.
MOULDING’S VETO VETOED
Arguably more important for retail investors, Moulding losing his special share will mean he will no longer have the power to unilaterally veto hostile takeovers. In April 2023, THG revealed an approach for the business by private equity group Apollo Global Management that saw the company’s share price almost double to 117p.
But the subsequent collapse of the stock was even more dramatic after Moulding pulled the plug, saying the deal was not right for THG.
THG is believed to have fielded multiple approaches from private equity buyers in recent years as the company’s shares plunged from highs of nearly 800p 30-months ago. The timing of the special share removal is subject to the outcome of the Financial Conduct Authority’s review for reform of the listing regime, THG says.
BUYOUT BATTLE COULD BE ON CARDS
When the veto powers are removed, it will allow the board to decide if bid approaches should be put before shareholders. This could see private equity investors reignite their interest in a take-private deal, potentially at a large premium to the current market value.
Last year Moulding gave up his chairmanship of THG after City criticism, appointing Charles Allen, Lord Allen of Kensington CBE, as non-exec chairman, allowing Moulding to concentrate on the CEO role.
