British e-commerce giant The Hut Group (THG) has turned down a 2 billion pound takeover offer from two investment companies after saying it undervalued the business.
The group said late Thursday that it received an unsolicited takeover bid from Belerion Capital Group Limited and King Street Capital Management of 170 pence per share.
It rejected the offer, saying it “significantly undervalued the company and its future prospects”.
THG also revealed Thursday that investment firm Candy Ventures, controlled by property tycoon Nick Candy, was in the “very early stages of considering” a takeover of the business.
Shares of THG, which have dropped over 80 percent in the past year, were down 4 percent at the end of Thursday to 116p. In early trading on Friday shares were up 27 percent following the takeover news.
Reports of the group potentially being sold first circulated in February, with Advent International and Leonard Green named as two investment firms exploring a buyout.
But when the group published its full-year results in April, CEO and founder Matthew Moulding said proposals it received were “unacceptable, failing to reflect the fair value of the group”.
THG has grown quickly in recent years as it profited from the ongoing consumer shift to online channels which only accelerated further during the pandemic.
In its preliminary results for the 12 months ending December 31, the group reported revenue of 2.18 billion pounds, an increase of 35 percent from a year ago and up 91 percent compared to two years ago.
The company made an adjusted EBITDA of 161.3 million pounds, up from 150.8 million pounds a year earlier.
Despite the growth, THG also said in April it expects cost inflation to impact its full-year profit. The company said it expects FY22 adjusted EBITDA to be broadly in line with the 161 million pounds it posted for FY 2021.
Its profit outlook, combined with concerns over the group’s corporate governance, have resulted in its share price plummeting over 80 percent in the past year.
In March, the company hired former ITV CEO Charles Allen as its new chair after founder and CEO Moulding said he’d no longer serve as chair in a movie to reassure investors.