British e-commerce firm THG ends agreement with SoftBank

By

Sandra Halliday

Published
Jul 26, 2022

There’s been speculation for some time and it’s finally been confirmed — e-tail giant THG has ended its deal with Japan’s Softbank and the latter’s massive investment in THG’s Ingenuity arm won’t now go ahead.

The fact that the firm’s share price dipped, but didn’t plummet, when the news was released perhaps underlines how widely it had been anticipated.

So what’s actually happening? Well, THG (which owns the Lookfantastic beauty webstore, among other businesses) said that “it has completed the internal separation of its key trading divisions which, as previously announced, simplifies THG's corporate divisional structures and provides it with material optionality and flexibility to enter into future strategic partnerships to generate value accretion for its stakeholders”.

But Softbank won’t be one of those partners, it seems. The company added: “Further to the announcement on 10 May 2021 that THG had entered into an option and collaboration agreement with SB Management Limited (SBM), a wholly owned subsidiary of SoftBank Group Corp, THG also announces that in light of global macroeconomic conditions the… agreement has been terminated by mutual agreement among the parties with immediate effect. The call option granted by THG to SBM will not therefore be, and will cease to be capable of being, exercised”.

What this means in practice is that the $1.6 billion SBM could have invested in THG’s technology arm, Ingenuity, won’t be forthcoming.

The company listed on the stock exchange last year, raising billions at a share price of almost £8 each. Softbank itself invested $730 million (around £515 million) in the shares with its Northstar trading arm currently owning around a 6.5% stake. But that stake is worth a lot less than it would have been worth in early 2021, THG shares trading today at only around 70p each.