Home Stock list THG molding abandons its “gold share” after fall in shares

THG molding abandons its “gold share” after fall in shares

  • CEO abandons gold shares, shares rise 8%
  • THG is looking for a premium listing
  • THG had been affected by the uncertainty of Ingenuity

LONDON, Oct. 18 (Reuters) – THG (THG.L), a UK online retailer and tech group backed by SoftBank, announced on Monday that it would forgo its founder’s “golden share” and seek a premium listing after the fall in its shares last week. .

THG was rocked by a 35% share price collapse after a disappointing pitch to investors, forcing it to address corporate governance issues more broadly.

After presenting an exceptional initial public offering last September, she drew up plans to separate and list different parts of the business, prompting some investors to question the overall strategy and value.

The decision to remove the founder’s special share will be closely watched in Britain, where regulators are soon expected to allow dual-class companies to access its leading stock indexes in a bid to attract more equity. technology companies.

“After our anniversary of listing in 2020, we believe the time has come to take this next step and apply for the Premium segment in 2022, continuing the development of THG,” said CEO Matthew Molding.

This means that THG would be eligible for entry into the FTSE indices and in turn would see a strong rise in interest from passive and active investors.

Shares were up 9.8% at 10:04 am GMT.

The reaction from the analyst community has been mixed, with Citi calling the action a “buy” and saying the recent sell-off was “overblown”, while others remained skeptical.

“This two-class structure was only to last 3 years. Moving forward one year is not exactly a drastic reform, nor a magic wand,” said Neil Wilson, chief market analyst for Markets.com.

“It is clear that the governance problems run much deeper than a simple airbrush can tackle,” he added.

A beauty and nutrition vendor who also runs an e-commerce and logistics arm for its partners, THG has been impacted by plans to split its Ingenuity digital commerce division into a separate company.

Japanese venture capital giant SoftBank bought a stake in THG in May and signed a deal that would give it the ability to inject an additional $ 1.6 billion into Ingenuity once created, at a valuation of $ 6.3 billion. of dollars.

Investors were baffled by the maneuvers and questioned the parent company’s valuation in the event of a fallout from Ingenuity, which hosts the lucrative beauty businesses that THG’s revenue relies on.

The stock is down 63% year-to-date, with an aggregate market value of $ 4.85 billion.

THG owns beauty retailer Lookfantastic, makeup brand Illamasqua, beauty box service Glossybox, and supplement company Myprotein.

The UK Financial Conduct Authority (FCA) has proposed allowing dual class share structures for “innovative companies, often run by founders” during the first five years of a listing on the premium segment of the LSE.

Dual-class share structures allow company founders to retain control at the expense of common shareholders and are popular in New York and Amsterdam, the EU’s premier share trading center.

They are already available in London on the standard segment, but shareholder rights groups who support “one share, one vote” oppose their introduction to the premium segment in London where the best companies are listed and have access. to the FTSE indices.

($ 1 = 0.7285 pounds)

Additional reporting by Rachel Armstrong and Abhinav Ramnarayan; edited by Michael Holden and Jason Neely

Our Standards: The Thomson Reuters Trust Principles.

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