THG has decided to proceed with demerging its Ingenuity division into a private independent company.
- The demerger aims to simplify THG’s business model and improve its financial profile.
- An anticipated equity value of £100m is expected for the newly independent Ingenuity.
- THG CEO, Matthew Moulding, will lead a £75m equity raise, investing £10m himself.
- The move is supported by key shareholders including Sir Terry Leahy and Sofina.
THG has confirmed its intention to demerge its Ingenuity division, transitioning it into a separately managed private company. This strategic decision aims to streamline THG’s operations, enhancing its focus on core consumer beauty and nutrition sectors. The demerger is anticipated to grant Ingenuity an equity value of approximately £100 million, positioning it as a robust entity in its own right.
The primary objective of this demerger is to simplify THG’s business model, focusing resources on being a globally recognized, cash-generative beauty and nutrition company. This move is expected to enhance the company’s balance sheet, capital expenditure, and cash flow profile, thereby making it more attractive to investors and stakeholders.
THG’s board has highlighted the substantial potential to drive shareholder value through this strategic separation. By allowing Ingenuity to operate independently, the division can better focus on digital brand scaling and the intricacies involved in acquiring new audiences and enhancing ecommerce efficiencies.
Post-demerger, THG will retain its Nutrition and Beauty divisions. These sectors have shown resilience and growth, with a reported 2.8% increase in third-quarter revenues, charting a path of positive development in THG’s core areas of expertise.
To facilitate the spin-off, THG has announced plans for a £75 million equity raise, spearheaded by its CEO, Matthew Moulding. Moulding has committed to personally invest £10 million in this fundraising effort. Key stakeholders such as Sir Terry Leahy and Sofina have shown their support, with their expected contributions estimated to total around £33 million. This concerted effort marks a pivotal initiative to secure the financial foundation needed for Ingenuity’s independent operation.
The demerger and accompanying equity raise signify a transformative phase in THG’s strategic realignment.
