THG shares jump as investors welcome demerger plans

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.