No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Shareholders of THG welcomed the ecommerce group's plans for its demerger on Thursday, with the company outlining proposals to separate its Ingenuity tech arm from its beauty and nutrition businesses.
The company, which first tabled the demerger back in September and a fundraising in October to provide Ingenuity with enough cash, said its planned separation simplifies its business model and should improve the balance sheet, capital expenditure and cash flow profile.
Ingenuity would be operated as a standalone entity, valued at 88m, leaving the beauty and nutrition businesses with a "more focused" strategy, with an attractive growth profile and strong cash generation, THG said.
"It is expected that [the core business] would be capable of optimising returns to its shareholders instead of reinvesting profits and cash flow into IngenuityCo's technology capital expenditure requirements," the company said.
Some 298m of THG's lease liabilities would transfer to Ingenuity on completion, cutting THG's gross debt.
As part of the transaction, THG shareholders are able to redesignate their ordinary shares as B shares, which will entitle them to a preferential distribution of Ingenuity shares. The B shares will be unlisted, non-voting shares in the company.
Ahead of an annual general meeting at the end of December, THG said its directors unanimously recommend shareholders vote in favour of the proposed demerger, saying it is "is in the best interest of shareholders and the company as a whole".
The stock was up 9.1% at 47.22p by 0904 GMT.
The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.