THG PLC (LSE:THG) shares jumped 6.7% to 46.2p after it laid out plans for the demerger of its Ingenuity digital and logistics arm in a bid to create a more profitable core business.
Ingenuity would be separated into a private company under the move, leaving THG’s core business comprising of its beauty and nutrition wings, a statement said on Thursday.
Completion is expected by the first trading day in January, meaning the MyProtein owner is expected to be eligible for inclusion in the FTSE 350 from March.
“It is expected that [the remaining business] would be capable of optimising returns to its shareholders instead of reinvesting profits and cash flow into Ingenuity’s technology capital expenditure requirements,” THG said.
Some £298 million of THG’s liabilities would be transferred with Ingenuity, while respective €600 million, £109 million and £170 million facilities would stay with the core business.
Chief operating officer John Gallemore will take up the role of Ingenuity’s executive president, as the rest of THG’s remained unchanged.
Shareholders have the option to redesignate their shares in the circular, which said a general meeting would be held on December 27 to vote on the move.
“The demerger simplifies THG's business model, as a free cash flow generative global consumer beauty and nutrition group, with an improved balance sheet, capital expenditure and cash flow profile,” it added.
There was also guidance given for the remaining business that owns MyProtein, THG Beauty and various e-commerce sites, which is described as a "highly cash generative consumer brands group", expected to deliver mid-to-high single digit revenue growth over the medium term and an EBITDA margin of circa 9%.
** Update: Adds detail, share price **