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THG shares pop on £4.5bn SoftBank deal

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UK prime minister Boris Johnson with The Hut Group (THG) founder Matthew Moulding during a visit to a fulfillment centre. Photo: Ben Stansall/WPA Pool/Getty Images
UK prime minister Boris Johnson with The Hut Group (THG) founder Matthew Moulding during a visit to a fulfillment centre. Photo: Ben Stansall/WPA Pool/Getty Images

Online retail empire THG, also known as The Hut Group (THG.L) announced after trading hours on Monday a new big acquisition and fund-raising package — a complex joint venture deal with Japanese investment giant SoftBank. 

Shares were up 13% by mid-morning in London following the announcement — bucking the broader market selloff.

A new technology division of Matthew Moulding-led THG is to be formed. Called THG Ingenuity, it will reportedly be a "social media influencer" platform to promote products. The investment deal with SoftBank values it at $6.3bn (£4.5bn). 

Moulding, a billionaire businessman, has previously been dubbed "Britain's Jeff Bezos".

SB Management, an arm of SoftBank, bought an option to buy a 19.9% stake in the new venture. It will also take a $730m stake in THG through a share placement. 

Read more: Global markets sell off on inflation fears

The fund-raising comes less than a year after THG went public. At the time, it was the biggest London stock market debut by market cap since Royal Mail (RMG.L) in 2013. It net the company £920m while shareholders, led by Moulding and private equity group KKR, shared gross proceeds of £961m. KKR sold its entire shareholding. 

THG five-day look. Chart: Yahoo Finance UK
THG five-day look. Chart: Yahoo Finance UK

THG said in a statement that the entity is "yet to be formed", and will be a "THG owned and controlled subsidiary group, comprising the Ingenuity platform IP and operating trade and assets."

“To effect the SBM investment, THG Ingenuity will be required to be a separate legal entity capable of receiving the investment and this process has already commenced.”

THG also announced the acquisition of Bentley Laboratories, an American prestige beauty developer and manufacturer, for $255m. 

The company has been one of the beneficiaries of the online shopping boom spurred by coronavirus lockdowns. Sales rose more than 40% in 2020 to £1.6bn. 

Watch: What are SPACs?

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