THG surges as retailer rejects third takeover offer, Candy Ventures mulls bid

Shares in e-commerce retailer THG surged early on Friday after the firm rejected a third takeover offer from Belerion Capital and King Street Capital Management a day earlier and news broke that property investor Nick Candy was also mulling a possible bid.

THG said the unsolicited proposal of 170.0p a share, a 46% premium to Thursday's closing price, "significantly undervalued" the company.

Candy Ventures confirmed on Thursday that it was in the preliminary stages of considering a possible £1.4bn offer for THG. Candy now has until 16 June to make a formal bid for THG or walk away under UK takeover rules.

Analysts at Liberum, who previously noted that THG's share price decline of roughly 80% over the last twelve months was "excessive", said the stock remained "highly undervalued" and stated a potential bidder could take the company private and look to later relist in the US, where tech companies receive "much greater appreciation" from investors.

"The three Key THG businesses – beauty, nutrition, and ingenuity - combined should generate over £2.0bn in sales in 2022, and if separated out, would be highly valued strategic assets in their own right which should underpin the valuation," said Liberum. "We continue to see potential for some form of corporate activity unless the share price recovers meaningfully."

As of 0845 BST, THG shares had rallied 27.18% to 148.10p.

Reporting by Iain Gilbert at Sharecast.com