We are beginning to see one of the after-effects of the recent market correction feed through. Those businesses which have been particularly badly beaten up are now looking vulnerable to opportunistic bids and the speculation is starting to mount.
Two names apparently in the firing line are fancy exercise bike maker Peloton and e-commerce play THG.
While the initial hype around these businesses may have added too much to their respective share prices as perceived beneficiaries of lockdown, now that froth has cleared there could be some substance to talk of bid interest.
“Peloton may be unprofitable, but it is still a strong brand in an emerging world where exercise and tech are likely to be ever more closely linked and it also has a potentially attractive subscription-based model. You could see it as a logical fit for its two rumoured bidders Nike and Amazon,” said AJ Bell’s Russ Mould.
“Nike is looking to move beyond footwear and sports attire and Amazon continues to spread its tentacles into more areas of people’s lives.
“Peloton’s founder John Foley, who has attracted the ire of activist investors on governance grounds, might be an obstacle to any deal given the veto power he enjoys under the firm’s dual share class structure.
“THG also has a powerful founder in the form of Matt Moulding, and he may resist private equity predators and potentially even take the business private as he has reportedly threatened to do in recent months.
“Moulding has not reacted well to the slings and arrows that most people would accept are the price of being a public company – with an investor day which went down about as well as a bucket of cold sick last year, prompting him to indulge in claims of conspiracy.
“The market has grown increasingly sceptical about the prospects for its Ingenuity platform which was initially perceived as the big growth engine of the group, selling e-commerce solutions to third parties.
“However, THG still has a valuable collection of its own nutrition and beauty product sites which are clearly interesting enough in their own right to suitors.”