THG ends investment deal with SoftBank

THG: undervalued?

Health and beauty giant THG has ended an agreement with Japan’s SoftBank blaming “global macroeconomic conditions.”

THG said it has completed the internal separation of its key divisions as previously announced but the call option with SoftBank to inject a further $1.6bn into its technology arm THG Ingenuity, its online retail services division, will also not go ahead.

The company, which owns a range of internet health and beauty retailers including Lookfantastic, Myprotein, ESPA and Illamasqua, secured $730m (£610m) of new investment from a division of SoftBank to help fund expansion of its technology platform a few months before it listed in London in 2020.

The deal included an option to invest £900m within 15 months to take a near 20% stake in Ingenuity.

The deal would have put a £4.5bn valuation on that division alone, which at the time made up less than 1% of THG’s turnover.

THG said on Tuesday that the deal with SoftBank had been “terminated by mutual agreement among the parties with immediate effect”.

A THG statement to the market said: “THG plc announces that it has completed the internal separation of its key trading divisions which, as previously announced, simplifies THG’s corporate divisional structures and provides it with material optionality and flexibility to enter into future strategic partnerships to generate value accretion for its stakeholders.

“Further to the announcement on 10 May 2021 that THG had entered into an option and collaboration agreement (with SB Management Limited, a wholly owned subsidiary of SoftBank Group Corp, THG also announces that in light of global macroeconomic conditions the O&C agreement has been terminated by mutual agreement among the parties with immediate effect.

“The call option granted by THG to SBM will not therefore be, and will cease to be capable of being, exercised.”

Softbank continues to own a 6.5% stake in the tech firm.

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