Online Beauty Giant's Offline 2M SF Property Is Sold And Iced
Private equity often has its eyes on a potential takeover target's real estate portfolio. But firms eyeing online beauty giant THG after the company's losses rose may not find much to play with.
The disposal by founder Matthew Moulding of THG Group's 1M SF Manchester HQ for as much as £250M — and the collapse of long-cherished plans to build another 1M SF of offices on a nearby site — has sparked interest in a tidying up of the online retailer's property commitments.
The apparent end of the plans for a new campus at Columbia Threadneedle's Manchester Airport City site removes one complexity — and potential liability — from the takeover table for any potential bidders for the company.
Last month it was disclosed that a 245K SF hangar at Manchester Airport has been sold by THG to LCN Capital, with the purchase backed by a £21M loan from Rothschild & Co., Place North West reported. The building was last sold in 2020 for £44M.
Both moves follow recently published accounts for the calendar year 2022 that showed THG offloading noncore freehold buildings worth £21M. This represented a £1.8M discount to fair value.
Since late June speculation has been growing about a hostile private equity takeover sparked by founder Matthew Moulding's decision to give up his golden share, which gave him a veto.
The property deal that sparked enquiries saw Moulding's private vehicle Moulding Capital sell the existing THG HQ to SLBI Propco C, managed by property firm ICG Longbow. The buildings remain security for the remaining £128M loan made by Warrington Council in 2020. Moulding's business bought the five warehouses and office and Icon Business Park in 2019 for £250M.
Plans to develop a 1M SF HQ campus at Manchester's 150-acre Airport City were first revealed in 2018. Columbia Threadneedle took effective control of Airport City following a £400M shareholder buyout in summer 2020. However, there has been no progress on the development and a £67M loan arranged in 2019 to help kick-start the development has not been drawn down and has now been cancelled.
Columbia Threadneedle did not respond to requests to clarify the future of the Airport City site, nor did THG.
In May 2022 THG ended talks about a takeover bid by private equity firm Apollo claiming the valuation was unsatisfactory. Attempts to get Apollo to up its offer got nowhere.
THG has endured a stock market roller-coaster ride. The September 2020 initial public offering valued the business at £5.4B. Since then the share price has fallen by 90%.
The latest financial data, covering the calendar year 2022, showed turnover rose by 2.4% to £2.2B, but the margin fell, and operating losses shot up from £138M to £496M.
The analyst consensus is that revenue will fall in 2023.
