Activist shareholder calls for action at THG

By

Nigel TAYLOR

Published
Mar 31, 2023

THG is being urged to up its game. Activist shareholder Kelso Group has increased its holding in the online retail and technology giant while demanding its board delivers results that “ensure the share price reflects what we strongly believe to be intrinsic value” of the business.

While it’s only a minor stake increase in the grand scheme of things (0.4% and 7.4 million shares), Kelso Group’s influence is strong backed up a heavyweight line-up of business experts.

In a statement issued to the London Stock Exchange, Kelso outlined four recommendations to THG's board.

It said it considers the transition of THG from the Standard List to the Premium List of the London Stock Exchange “would be significantly accretive to shareholder value”. 

Next, it said: “We urge THG to continue to review strategic options, alongside focussing on cash generation, to ensure underlying value is realised in a practicable timeframe. It is Kelso's view that there is a clear path to enhancing shareholder value through more financial visibility, which we hope is detailed in the pending results, by highlighting the underlying value based on the ‘sum of the parts’.”

Given its view that the share price is undervalued, it urged THG to consider a share buyback programme soon after the pending preliminary results announcement. “We note that THG maintains the authority to buy back up to 10% of its outstanding shares. We think such a buyback would demonstrate the board's confidence in the business,” it said.

Finally, Kelso believes THG's relationship and communications with the investment community need reinvigorating to improve the general understanding of the potential of its business.

It added: “Already in 2023, THG has achieved some major commercial accomplishments such as a burgeoning relationship with Iceland, which exemplifies the brand value of MyProtein, the formalisation of a technology partnership with Autostore, the increased presence in several large German retailers and the move into the gym sector. 

“Whilst these achievements have been communicated through social media platforms such as LinkedIn, we believe deals of such commercial significance should also be communicated directly to current and potential THG investors via the Regulatory News Service, specifically RNS Reach which was introduced as a service to improve listed company communication with its shareholders”.