THG PLC (LSE:THG), owner of Myprotein and CityAM newspaper, fell 10% after cutting its full-year profit guidance and saying it has begun working on selling its Ingenuity digital and logistics arm.
As well as the demerger, the company is also applying to change its listing category on the London Stock Exchange so it can be included in the FTSE indices.
The move to de-merge THG Ingenuity would be to "maximise shareholder value", the company said, after it gained feedback from major shareholders.Management and advisers are currently reviewing how to structure the process, after gaining tax clearance from HMRC.
Following any demerger, THG PLC (LSE:THG) would consist of its Beauty and Nutrition arms, which it says are "globally leading consumer businesses, which are highly profitable, cash generative and capable of paying dividends".
THG stressed there was no certainty on the timescale, but that shareholder approval would be required.
The Manchester-based group also reported results showing flat underlying revenue in the first half of the year and a 1.5% increase in adjusted earnings (EBITDA) to £52.3 million.
Ignoring discontinued or exited businesses, revenues increased 0.1% to £911.1 million, or up 2.2% on a constant currency basis.
Including discontinued operations, total revenues fell 3.6% to £934 million and EBITDA was up 3.6%.
The THG Beauty business increased sales 6.9% and adjusted EBITDA by 170% after changes to the business model changes to focus on more profitable orders located closer to distribution hubs.
THG Nutrition saw sales fall 7.5% as it faced "transitory headwinds" from the rebrand of the Myprotein business, which was said to be nearing completion, with "improving momentum" expected to see a return to growth in the current quarter.
The full-year outlook for adjusted EBITDA was guided to be at the lower end of analyst expectations, which currently are in a range of £133.8-156.5 million.
Explaining the change of listing to the LSE's equity shares (commercial companies) category, chief executive Matthew Moulding said: "Following the completion of the FCA listing regime review, we are taking the appropriate steps to transfer to the ESCC category."
He said he expects the group to be eligible for inclusion in the FTSE UK index series no later than March 2025, with its current £856 market cap potentially putting it in the middle of the FTSE 250.
** Update: Adds share price and guidance details **