The activist investor Kelso Group has upped its stake in THG and called on the online retail specialist to consider separating out its Myprotein nutrition business.
Kelso, which first took a stake in struggling THG in January, said it now had 8m shares, through a mix of ordinary shares and contracts for differences. This represents about 0.55% of THG’s total share capital.
The investment group said its increased stake in THG, formerly known as The Hut Group, was prompted by its belief in the “significant intrinsic value” of Myprotein, which could make the nutrition business a potential takeover target. Shares in THG rose 6% on Friday morning after the announcement.
In a statement, Kelso said: “THG’s nutritional business is likely ultimately to end up being owned by one of the large global food and beverage companies all of which have already begun investing in nutritional, wellness and healthier assets to improve the mix of their sales between nutrition and chocolate or sugar products.” The investment group suggested potential buyers could include Nestlé, Coca-Cola, PepsiCo and the Cadbury’s owner, Mondelēz International.
Kelso, which was founded in 2022 by the former boss of Zeus Capital John Goold, raised £3m in January from about 20 UK entrepreneurs to identify and unlock value in the UK stock market. Its biggest independent shareholder is the spreadbetting firm Spreadex.
The investment group said THG’s founder and chief executive, Matt Moulding, had “consistently tried to explain the true value of the nutritional business” and any potential takeover deal would need to recognise the worth of Myprotein.
THG’s stock had soared by 45% on Monday after news of a buyout approach from the private equity group Apollo. But the shares then fell back almost 20% on Tuesday as THG reported mounting losses.
Moulding then published an online rant in which he quoted a 1990s track by the singer Alanis Morissette and claimed that it was “standard practice” for hedge funds, analysts and the media to “build negative coverage” against listed companies to drive down their share price.
Founded in 2004 by Moulding and his fellow former Phones4u executive John Gallemore to sell CDs online, THG expanded rapidly by exploiting a now closed tax loophole that allowed companies to avoid VAT on small goods, including CDs and DVDs, by posting them to the UK from the Channel Islands.
Amid heavy competition from Amazon, the company moved on to acquiring niche e-commerce sites that were not directly in competition with the US online specialist, and capitalising on its IT and logistics assets.
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Moulding received an £800m-plus share windfall after floating THG. As part of the flotation in September 2022, he took charge of properties from THG and then let them back to the group for annual rent of about £19m.
THG declined to comment on Kelso’s statement.
