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THG Holdings PLC (LON:THG), owner of online retailer The Hut, climbed almost 5% today as investors applauded the acquisition of businesses in the UK and US yesterday.
The Hut is acquiring Dermstore, the number one US retailer of skincare and speciality beauty products, for US$350mln and two UK nutrition suppliers, Claremont Ingredients and David Berryman Limited, for GBP59.5mln.
THG floated in September at 500p, netting its founder Matthew Moulding a GBP700mln payday, but was trading at just shy of 800p today as investors have warmed to the strategy of acquiring lifestyle and skincare brands and running eCommerce sites for others.
Moulding said one of the reasons for the IPO was to give it the ability to make strategic purchases.
Dermstore would “enhance its beauty strategy by substantially enhancing its relationships with the key global beauty brands,” he said in a statement.
Broker Liberum added: “Two major acquisitions made in a post Xmas surprise underpin the IPO rationale to make major global investments.
“Dermstore.com is the #1 pure-play US online retailer of prestige skincare & specialty beauty brands and two deals in the Nutrition space enhance vertical integration supporting the margin profile of this division, should increase speed to market and could accelerate innovation further.”
Liberum added that it sees the deal as boosting underlying profits by 4% for the 2021 financial year while the next trading update on 12 January should see a similar pattern to October and November, which sparked a raft of upgrades.
Buy with a target price of 770p is Liberum’s view.
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