Adore Beauty Receives Takeover Offer from THG

Online beauty retailer Adore Beauty experienced a significant surge in its share value on Monday, following its decision to reject a takeover offer from UK-based THG. The offer, estimated at $122 million, was turned down by the Australian company, which is co-founded by Kate Morris and James Height. Adore Beauty's shares rose by 20.9%, reaching $1.13, after news of the rejection became public.

Adore Beauty, co-founded by Kate Morris, has experienced significant share price drops, leading to vulnerability to acquisition. THG, formerly known as The Hut Group, has been expanding in Australia and has faced its own share price challenges, dropping 90% since its 2020 London Stock Exchange listing. Despite these setbacks, THG has been active in Australia, partnering with various brands and streamlining its operations.

In terms of financial performance, Adore Beauty reported $180.6 million in revenue and $0.6 million EBITDA for the 2023 financial year. This represents a shift from its 2020 financial year performance of $121.1 million in revenue and $5 million in earnings. The company, currently led by former Priceline executive Tamalin Morton, is adapting to a tough retail environment and has recently seen its shares increase following a positive trading update.

THG, founded by Matthew Moulding in 2004, operates in beauty, ingenuity, and nutrition and wellness. Despite substantial annual sales, THG reported a significant annual loss and has been restructuring by shedding loss-making businesses.

This takeover bid occurs amidst a resurgence of interest in local beauty and fashion deals, indicated by recent acquisitions in the Australian market by prominent investors.

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