LONDON (ShareCast) - (Sharecast News) - Activist investor Kelso Group said on Friday that it has upped its stake in e-commerce retailer THG to 8m shares, as it argued that the company's nutrition business - MyProtein - is one of the key drivers of the investment.
Kelso, which lifted its stake through an increase in the value of its contracts for difference, said that if THG does not receive a takeover offer that reflects the underlying value of the nutrition business, it must consider separating the business out.

Kelso noted that in its results earlier this week, THG announced the sales of its nutrition business, including MyProtein, as being around $800m for the year ended 31 December 2022.

It highlighted two listed pure play global health nutrition companies: Celsius and Bellring. It noted that Celsius has sales of $654m and trades on an EV/sales of 10.8x, while Bellring has sales of $1.4bn, on 3.9x.

Kelso said: "Matthew Moulding, the CEO and founder of THG, has consistently tried to explain the true value of the nutritional business. In addition, the food and beverage companies we refer to above have vast offline global distribution networks that could significantly increase the offline sales of MyProtein. In return, we strongly believe, that MyProtein's direct to consumer digital model would be highly attractive to many of these companies."

It added that any forthcoming offers for THG as a whole "must clearly reflect this underlying value and in the event that an acceptable offer is not forthcoming then a separation of MyProtein should be considered, alongside a potential partnership and minority investment from companies such as those highlighted".

Kelso said it believes the nutrition business is likely ultimately to end up being owned by one of the large global food and beverage companies, all of which have already begun investing in nutritional, wellness and healthier assets to improve the mix of their sales between nutrition and chocolate or sugar products.

"All those transactions again support Kelso's sum of the parts view of THG," it said.

At 1055 BST, THG shares were up 6% at 90.80p.

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