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THG ends SoftBank partnership blaming economic conditions

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Cult Beauty has been bought by The Hut Group for £275 million (CultBeauty/PA)
Cult Beauty has been bought by The Hut Group for £275 million (CultBeauty/PA)

Online retail group THG has terminated its link-up with Japanese investment giant SoftBank, blaming the global economic backdrop.

SoftBank first became an investor in the Lookfantastic and Cult Beauty owner last year with a roughly 730 million dollar (£609 million) cash injection.

SoftBank, which invested through its SB Management subsidiary, agreed at the time to a call option allowing it to inject a further 1.6 billion dollars (£1.3 billion) into THG technology business THG Ingenuity.

The investment agreement would have valued the tech operation at around 6.2 billion dollars (£5.2 billion).

However, on Tuesday, THG confirmed that the call option is no longer able to be exercised due to the termination of the agreement between the firms.

“In light of global macroeconomic conditions, the O&C Agreement has been terminated by mutual agreement among the parties with immediate effect,” the company said.

It comes after a 90% plunge in the value of THG’s shares over the past year – taking it to a valuation of around £880 million – following concerns over the value of the Ingenuity business and criticism of the group’s corporate governance.

THG also confirmed that it has completed the internal separation of its key trading divisions.

The separation is part of THG’s efforts to simplify its corporate structure, which saw former ITV boss Charles Allen join as non-executive chairman, after founder Matt Moulding previously held dual chairman and chief executive roles.

Last month, Belerion Capital Group and property billionaire Nick Candy separately showed interest in buying THG but ultimately walked away from bidding.

Shares in THG moved 1% higher in early trading, indicating that investors had already assumed the deal would be terminated.

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