UK online retailer THG shares tumble 17% as buyout talks end

Rejection of takeover comes against backdrop of new data indicating Britain's economy was stagnant in the first quarter

The breakdown in talks with Apollo Global Management is just the latest setback THG has suffered since 2020

British online retailer THG have ended talks with Apollo Global Management, saying there was "no merit" in further discussions after it rejected the private equity firm's buyout proposal based on "inadequate valuations". The shares closed 17% lower on Friday. 

Apollo, in a separate statement, said it no longer planned to make an offer for the British company, which owns beauty and nutrition e-commerce websites as well as an online platform serving third-party brands.

THG has had several setbacks since 2020, including profit warnings that have weighed heavily on its shares and led to several takeover approaches, all of which have been rejected either publicly or privately.

Rejecting Apollo's proposal was on a basis "consistent with all previous offers" that were spurned because of "inadequate valuations and the nature of those offer structures", THG said.

Meanwhile, Britain's economy was stagnant in early 2023, better than the shallow recession once expected, but an unexpectedly sharp drop in output in March underscored how fragile its recovery remains.

GDP edged up 0.1% in the first three months of the year, official data showed, the same tepid pace as in the final quarter of 2022. 

In March alone, GDP dropped 0.3%, compared with poll forecasts for it to hold steady. While industrial output and construction grew, the much larger services sector dropped, reflecting weak car sales and retail, hurt by unusually rainy weather and high inflation.

Widespread industrial action also weighed on economic activity in the first quarter, the statistics office said.

"With the key services side of the economy continuing to slow in the face of higher borrowing costs and rising prices, it still feels like we're walking through treacle," said Tom Stevenson, personal investing director at fund manager Fidelity International.