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Matthew Moulding, the boss of the online beauty, nutrition and technology services group THG, is to surrender his golden share in the company in an attempt to restore the City’s confidence after a torrid fortnight.

Sky News has learnt that the owner of The Hut Group, which floated just over a year ago, will announce next week that it plans to move its listing to the premium segment of the London Stock Exchange in 2022.

To pave the way for that, THG executive chairman and chief executive Mr Moulding will give up his ‘founder’s share’ – which would prevent a hostile takeover of the company – during the course of next year.

City sources said this weekend that the move would be announced next week, and possibly as early as Monday morning.

It will represent a bid by Mr Moulding, who is THG’s biggest shareholder with a 22% stake, to establish a more conventional corporate governance structure after a calamitous week in which the company lost billions of pounds of value.

The abolition of its dual-class share structure and the prospective shift to a premium LSE listing will be welcomed by institutional investors who saw the value of their holdings tumble this week.

Some fund managers had objected to the extent of Mr Moulding’s control ahead of its float last year, although THG said at the time that the ‘special share’ would be retired after a maximum of 36 months.

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A City ally of the THG supremo said the decision reflected “a willingness to listen to the views of outside shareholders” about the existence of the ‘special share’ structure.

“Matt wants to do the right thing by the investors which came in at the time of the IPO,” the source said.

One investor said on Saturday that Mr Moulding and boardroom colleagues were now also considering recruiting an independent chairman as part of the process of stepping up to the LSE’s premium segment.

The investor added that the corporate governance changes would be viewed as a positive step, but that it was now essential if the company was to restore confidence among its wider shareholder base.

Sky News has also learnt that THG has been in talks in recent days about appointing Andreas Hansson, a senior SoftBank executive, as a non-executive director.

Dr Hansson, a former executive at the SoftBank-owned chip designer ARM Holdings, is chairman of Kahoot, an education technology platform also backed by the Japanese group.

The appointment, which has yet to be finalised, would cement a relationship between THG and the Japanese technology investment behemoth that was unveiled in May.

Under their deal, SoftBank invested $730m in THG’s ordinary shares and took an option – exercisable over a maximum of two years – to buy a 19.9% stake in THG Ingenuity, the division which builds and operates e-commerce sites for third-party clients such as Homebase and Revolution Beauty, for $1.6bn.

That option remains in place, and people close to the situation insisted this weekend that they were confident that it would be exercised.

Appointing a board member to a public company in which it holds a stake would be a rare move for SoftBank, while the agreement of THG to award a board seat to a 6% shareholder underlined the fact that their relationship was “a genuine partnership”, an insider said.

At a capital markets day this week, Mr Moulding talked up the potential of Ingenuity, but immediately saw THG’s shares slump by more than 30% amid scepticism about the lack of granular financial detail provided about the unit.

The scale of the share price fall stunned the company and its longest-standing external shareholders, which include Chrysalis Investments, the highly regarded team which has backed Klarna and Wise, the fintech giants.

THG’s other investors ahead of the IPO included BlackRock, the world’s biggest asset manager, and KKR, the New York-listed private equity investor.

The company, which is based in Manchester, has long been lauded as one of the UK’s biggest tech success stories, although there will now be intense pressure on its management to demonstrate that Ingenuity can become an engine of future earnings growth.

Since taking THG public, its executive chairman has cemented his status as one of Britain’s wealthiest people, landing a share windfall worth more than £800m late last year after hitting a number of financial targets set out in its flotation prospectus.

He already held a stake in the company worth about £1bn.

Earlier this year, Mr Moulding pledged a £100m stake in the company to a new charitable foundation, establishing him as one of Britain’s biggest individual philanthropists.

Nevertheless, THG’s promising debut on the public markets has been followed by a torrid period, with the shares more than halving during the last year.

As well as the proposed Ingenuity spin-off, it recently reiterated a plan to pursue a separate listing for its beauty division.

The company owns beauty sites such as Lookfantastic and Glossybox, and in August said it would pay about £275m to take control of Cult Beauty, a leading independent platform.

THG is also home to an online nutrition business, including MyProtein, which it says is the world’s largest sports nutrition brand.

Mr Moulding founded The Hut Group alongside John Gallemore – now its finance chief – in 2004, and it has since grown into a digital giant employing more than 10,000 people.

Ironically, his decision to surrender his golden share comes just months after a Treasury-sponsored review led by Lord Hill, the former EU commissioner, recommended that founders of fast-growing companies should be able to retain greater control after listing them through dual-class stock.

Deliveroo and Wise are the other main examples of tech companies which have floated using dual-class share structures this year.

THG floated at 500p-a-share, giving the company a market value of £4.5bn.

On Friday, the shares closed at 289.4p.

THG declined to comment on the looming governance changes.

Headline: Hut Group founder Moulding to give up golden share in bid to restore City confidence

Standfirst: The e-commerce group behind Cult Beauty and MyProtein is to apply for a premium London listing after a calamitous week that saw it shed billions of pounds of value, Sky News learns.

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Bread producers Hovis and Kingsmill close in on historic merger

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Bread producers Hovis and Kingsmill close in on historic merger

The owners of Hovis and Kingsmill are closing in on a definitive agreement to merge two of Britain’s most famous grocery brands following months of talks.

Sky News has learnt Associated British Foods (ABF), the London-listed company which owns Kingsmill’s immediate parent, Allied Bakeries, has proposed paying roughly £75m to acquire Hovis from its long-term private equity backers.

Banking sources said a deal could be formally agreed to combine the businesses as early as the end of next week, although they cautioned the complexity of the transaction meant the timing could yet slip.

Confirmation of a tie-up would come nearly three months after Sky News revealed ABF and Endless – Hovis’s owner since 2020 – were in discussions.

Industry sources have estimated that a combined group could benefit from up to £50m of annual cost savings from a merger.

ABF has also been exploring options for the future of Allied Bakeries separate from its talks with Hovis in the event a deal could not be agreed or is prevented from completing by competition regulators.

If it does go ahead, the merger will unite two historic bread producers under common ownership, with Allied Bakeries having been founded in 1935 by Willard Garfield Weston, part of the family which continues to control ABF.

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Hovis traces its history back even further, having been created in 1890 when Herbert Grime scooped a £25 prize for coming up with the name Hovis, which was derived from the Latin ‘Hominis Vis’ – meaning “strength of man”.

Persistent inflation, competition from speciality bread producers and shifting consumer habits towards lower-carb diets have combined to impair breadmakers’ financial health in recent decades, however.

In accounts filed at Companies House earlier this month, Hovis said it had “achieved positive financial progress despite continued tough trading conditions”.

The company reported sales of £439.6m in the 52 weeks to 28 September last year, down from £477.6m in the 53 weeks to 30 September 2023.

Earnings before interest, tax, depreciation and amortisation fell from £20.9m to £18.7m, which Hovis said was the result of the revenue decline and higher distribution costs.

“Overall bread share remained stable, despite significant price inflation and the ongoing cost-of-living crisis, demonstrating the resilience of the Hovis brand and its iconic status as one of Britain’s most loved food brands,” the accounts said.

This week, the trade publication The Grocer reported that Britain’s big four supermarkets, including Asda and Sainsbury’s, had delisted a number of Hovis-branded products.

The publication quoted a Hovis spokeswoman as saying the company was “aware of some adjustments to Hovis product lines in certain stores”.

“We remain fully committed to working collaboratively with our retail partners to grow our mutual businesses.”

The overall UK bakery market is estimated to be worth about £5bn in annual sales, with the equivalent of 11m loaves being sold each day.

Critical to the prospects of a merger of Allied Bakeries, which also owns the Sunblest and Allinson’s bread brands, and Hovis taking place will be the view of the Competition and Markets Authority (CMA) at a time when economic regulators are under intense pressure from the government to support growth.

Warburtons, the family-owned business which is the largest bakery group in Britain, is estimated to have a 34% share of the branded wrapped sliced bread sector, with Hovis on 24% and Allied on 17%, according to industry insiders.

A merger of Hovis and Kingsmill would give the combined group the largest share of that segment of the market, although one source said Warburtons’ overall turnover would remain higher because of the breadth of its product range.

Responding to Sky News’ report in May of the talks, ABF said: “Allied Bakeries continues to face a very challenging market.

“We are evaluating strategic options for Allied Bakeries against this backdrop and we remain committed to increasing long-term shareholder value.”

In a separate presentation to analysts, ABF – which is also in the process of closing its Vivergo bioethanol plant in Hull after pleading for government support – described the losses at Allied, which also owns own-label bread manufacturer Speedibake, as unsustainable.

The company does not disclose details of Allied Bakeries’ financial performance.

Prior to its ownership by Endless, Hovis was owned by Mr Kipling-maker Premier Foods and the Gores family.

At the time of the most recent takeover, High Wycombe-based Hovis employed about 2,700 people and operated eight bakery sites, as well as its own flour mill.

Hovis’s current chief executive, Jon Jenkins, is a former boss of Allied Milling and Baking.

This weekend, ABF declined to comment, while Endless could not be reached for comment.

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Good economic news as sunny weather boosted retail sales

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Good economic news as sunny weather boosted retail sales

Retail sales grew in June as warm weather boosted spending and day trips, official figures show.

Spending on goods such as food, clothes and household items rose 0.9%, the Office for National Statistics (ONS) said.

It’s a bounce back from the 2.8% dip in May, but last month’s figure was below economists’ forecast 1.2% uplift as consumers dealt with higher prices from increased inflation.

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Also weighing on spending was reduced consumer confidence amid talk of higher taxes, according to a closely watched indicator from market research firm GfK.

Retail sales figures are significant as they measure household consumption, the largest expenditure in the UK economy.

Growing retail sales can mean economic growth, which the government has repeatedly said is its top priority.

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What does ‘inflation is rising’ mean?

Where have people been shopping?

June’s retail sales rise came as people bought more in supermarkets, and retailers said drinks sales were up.

While hot and sunny weather boosted some brick-and-mortar shops, the heat led some to head online.

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Non-store retailers, which include mainly online shops, but also market stalls, had sold the most in more than three years.

Not since February 2022 had sales been so high as the Met Office said England had its warmest ever June, and the second warmest for the UK as a whole.

The June increases suggest that the May drop was a bump in the road. When looked at as a whole, the first six months of the year saw retail sales up 1.7%.

Filling up the car for day trips to take advantage of the sun played an important role in the retail sales growth.

When fuel is excluded, the rise was smaller, just 0.6%.

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Despite lower consumer sentiment and more expensive goods, consumers are benefitting from rising wages and are cutting back on savings.

The ONS lifestyle survey – backed up by hard data like the Bank of England’s money and credit figures – shows that households have rebuilt their rainy day savings and are cutting back on the amount of money they squirrel away each month.

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Former Poundland owner lines up advisers as restructuring looms

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Former Poundland owner lines up advisers as restructuring looms

The former owner of Poundland is lining up advisers to supervise its transition to new shareholders through a court-sanctioned process that will involve store closures and job cuts at the discount retailer.

Sky News has learnt that Pepco Group, which is listed on the Warsaw Stock Exchange, is drafting in FRP Advisory weeks after it struck a deal to sell Poundland to Gordon Brothers.

Industry sources said FRP had been asked by Pepco to act as an observer, with the High Court scheduled to sanction a restructuring plan in the last week of August.

Under the proposed deal, 68 Poundland shops would close in the short term, along with two distribution centres.

More shops are expected to be shut under Gordon Brothers over time, resulting in hundreds of job losses.

Pepco is said to be particularly focused on IT systems which Poundland uses in common with Pepco’s operations in Poland.

Barry Williams, managing director of Poundland, said at the time of the deal’s announcement: “It’s no secret that we have much work to do to get Poundland back on track.

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“While Poundland remains a strong brand, serving 20 million-plus shoppers each year, our performance for a significant period has fallen short of our high standards and action is needed to enable the business to return to growth.

“It’s sincerely regrettable that this plan includes the closure of stores and distribution centres, but it’s necessary if we’re to achieve our goal of securing the future of thousands of jobs and hundreds of stores.

Prior to the deal’s announcement, Poundland employed roughly 16,000 people across an estate of over 800 shops in the UK and Ireland.

Tax hikes announced by Rachel Reeves, the chancellor, in last autumn’s Budget have increased the financial pressure on high street retailers.

In recent months, chains including WH Smith, Lakeland and The Original Factory Shop have changed hands amid challenging circumstances.

In June, Sky News revealed that River Island, the family-owned clothing retailer, was also working with advisers on a rescue plan aimed at averting its collapse.

Pepco and Poundland declined to comment.

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