THG (LON: THG) shares tumbled Friday after talks with Apollo Global Management regarding a potential takeover broke down, according to the retail company.

Private equity firm Apollo sent a highly preliminary proposal to THG on April 17. However, after a short period of discussions, which THG said was an opportunity for Apollo to improve the proposed valuation and confirm the structure of its proposal, THG stated, “there is no longer any merit in continuing to engage with Apollo.”

The offer, like previous offers for the company, was rejected based on inadequate valuations and the nature of the offer structure.

“Having discussed with its financial and legal advisors, the Board has unanimously determined that it is not in the best interest of THG shareholders to seek an extension to the deadline set out in the Company’s announcement dated 17 April 2023,” said THG.

THG, which owns Myprotein, is down more than 13% at the time of writing, trading around the 65p mark.

However, it noted that its profitability and cashflow improvements during Q1 FY2023 have continued in Q2, along with ongoing online sales momentum. As a result, THG reiterated its expectations of positive free cash flow in FY2024 and adjusted EBITDA margins of around 9.0% over the medium term.

“The Board remains fully confident in THG’s strategic direction and long-term prospects as an independent company,” said Charles Allen, Chair of THG.

“As stated in our recent results, with a strong balance sheet and category leading positions within substantial global end markets that continue to benefit from long-term structural growth, we have confidence in our ability to deliver long-term value for shareholders and remain on track to be cashflow positive in 2024.”

By Sam Boughedda