Eugh, not sure what to make of this.
Can anyone explain to me the impact of this to retail shareholders as if I’m 5 years old.
If you’re holding THG shares, what would you do?
Edit- since you’re not allowed to hold private companies in your ISA, if I decided to obtain ingenuity shares, do they get transferred to my GIA?
I’m not certain what will happen as freetrade don’t seem to support corporate actions so we may end up having extra shares in the remaining part of thg and none in the private new company. But that is only my thought and I could be wrong
Just an educated guess but I think they will let us know more about the demerger fairly quickly as the financial year end for THG is 31 December.
My guess is that they want the demerger done in time for the year end so that from the new financial year 1 January it will be just the Beauty and Nutrition units.
I do agree that unfortunately we won’t be given an option on the demerger as FT are likely to do nothing and not give us a choice, I just hope we don’t get disadvantaged by it but my feeling is we will.
I may be way too sceptical but I still think the only reason why they are doing the demerger is because Matt wants to buy that unit on the cheap, as he has always said he feels that is the hidden gem and has the growth opportunity.
Perhaps someone from freetrade could say if holders here would get the choice or if we will just get whatever the default option is re shares in the demerged division.
I am sorry but you are not likely to get a choice.
I also don’t think Freetrade allows holding of private companies only traded so its more likely that we are going to be issued extra shares in THG but also any free shares given are likely to be deposited in our GIA as I don’t believe you can get free shares deposited in an ISA under the rules for ISA’s.
I still believe we will get more news on the demerger by the middle of November at the latest, as i feel THG will want the demerger before the end of the financial year which is the end of December.
The circular has finally been released and can be found on the investor relations page. Still going through it and not sure how I feel about it tbh. In anycase, I’m interested to know how Freetrade will handle this, particularly for those that want to roll into IngenuityCo.
Key question is of course, will FT support this in any way? There may be problems with ISA holdings in particular, has anyone reached out to FT yet to see what options they may be able to support? If so, can anyone share FT’s responses?
My understanding of the De-merger:
What are the Options?
The ratio of any THG shares exchanged to Class B will be one-for-one.
What happens to the Class B shares?
The Class B shares will then convert into shares in the newly-separated Ingenuity company (IngenuityCo). Ingenuity will be a private company, therefore these shares will not be listed on any exchange and will not be easily tradeable. You almost certainly won’t be able to hold them in an ISA. As a private investor, holding what will presumably only be a tiny amount of shares comparatively with the institutional investors, I imagine you’ll effectively be locked-in with this holding (might even have to hold paper share certificates) until some unknown future date (years?) when Ingenuity may bear fruit. This could be a buy-out, relisting on a public stock exchange via IPO, or it could of course go bust and you lose everything!
What will happen to the value of the THG shares I don’t exchange i.e. RemainCo shares post de-merger?
Because at least 13.4% of THG’s total share count is being taken away to form IngenuityCo, there will be fewer leftover shares to form RemainCo. Its kind of like a big ‘share buy-back’ where 13.4% of the shares have been bought back and cancelled. Of course, RemainCo is now a smaller company, having lost its Ingenuity business.
It does seem to open up a can of worms not sure what the options are or if free trade with have to adjust their no corporate action policy.
I did raise this with Freetrade when the news was first announced regarding demerger and they stated they took it to their corporate actions team to look into. Then they stated that they were waiting for the circular to be released so that they could see how they could make this work.
Need to follow up with FT now that has been released.
Thanks for that, who know’s maybe they’ll be able to offer a solution (though I doubt it!)
If the price gets anywhere near my brake even point before the demerger I would be tempted to cash in before.
I know how you feel! I really regret investing in THG and would look to exit if ever the opportunity came up. Sadly, I’m some way off break-even at the current SP.
I’m fairly certain that with FT we’ll be stuck with 100% RemainCo post de-merger, which means I’m stuck with shares in two on-line retailers in the beauty and health food businesses. Neither of which appeal to me and both of which are fighting for market share in competitive markets. They should both be profitable now Ingenuity has gone, but with that has any chance for meaningful growth.
That all said, the current SP still looks very cheap for two average/good on-line retailers, so surely there’s upside from this depressed share price…?
FWIW I think they ‘sold’ Ingenuity for peanuts considering how much money was ploughed into the business to get it where its at today (£87m what a joke!). If I could I would take up the offer for the Class B. Although it would be a punt, this is was the entire reason I invested in the first place.
Crazy to think the board rejected a £1.40 p/share offer in the past as it ‘significantly undervalued the business’
They rejected 1.70 per share, thinking about it now, sounds insane!
I so regret investing in THG, and to think I believed in MM as being a disruptor to the UK markets in the same vein as Elon being the maverick over in the states. He has effectively morphed into a poundshop Elon with his attitude (without 1/100 of the success to back it up), and I get hints of Phillip Green about him.
This deal is effectively a massive dilution and he will be gaining Ingenuity for free. Prior to the placing, total shares outstanding was about 1.3b, post placing it rose to 1.5b. Once the demerger concludes, it will be around 1.3b again.
If you had a 100 shares and decided to roll your shares into Ingenuity, you would be left with 13.4 Ingenuity shares with the remainder staying in RemainCo. If you decide not to roll into IngenuityCo and wanted to retain your holdings in RemainCo, your shares wont increase by the same proportion and you will effectively be holding the same amount. The outstanding shares in RemainCo will go back down to 1.3b ish and you’re left in the same position as you were but within Ingenuity being part of the company.
For years 100’s of millions spent on CAPEX to get Ingenuity started off the back of Nutrition and Beauty, which will never never be recouped and just before Ingenuity comes into it’s own, it gets given away.
Even if you decide to remain in IngenuityCo, you are effectively at the mercy of MM and Co, as their ‘Golden Share’ seems to be back on the cards for IngenuityCo.
I personally don’t think FT will give us an option it will remain as is.
From my prospective I would rather they didn’t separate as we have had all the pain of losses from Ingenuity and Matt and his cronies are going to get all the profit from it but hey thats exactly was Matt does anything he can do to make more money for himself.
As its going to happen no matter what we think I am happy with just having shares in the existing company as it does have 2 highly attractive and profitable businesses which can start to pay dividends but also could attract takeover offers at good prices.
I know some people who hold THG shares but use IG as their brokers have received link to vote in the extraordinary general meeting due to take place by the end of december. I’ve not received one myself and have asked Freetrade to send us the link.
Let me know if you received one.
Tbh it would be nice to vote but its already a done deal but having the choice to either take shares in the new co or staying with remain co is much more important.
THG responded to my query regarding voting ahead of the extraordinary meeting at the end of December. They state that the third party they’re using for proxy votes does not allow them to support this service outside of the US. Looks like thats a done deal! Really poor to be honest as IG, Halifax and a few other brokers allow their customers to participate in voting. Essentially, my UK broker cannot let shareholders vote for a UK company they own.
Regarding rolling into Ingenuity, or the option to do so, I’m still waiting for a response.
It would be nice if freetrade commented on if we will be able to choose to take shares is split off company or take share just in remaining parts this is important to holders with financial implications.
Even a no we can’t do anything would atleast give clarity and holders could just sell out before the demerger happens if they wanted to.
Hi team, please see above discussion on the demerger of Ingenuity, option to vote ahead of the general meeting as well as option to roll into IngenuityCo.
Reading the Terms and Conditions, seems quite brutal tbh. Have bolded some bits in:
I think moaning about FIFO, and this issue, which I wasnt aware of, I’ll start to make my way to another broker.
21.1. We and our sub-custodians may be notified of and/or be invited to vote, approve and/or take other actions in relation to Investments in your Freetrade Account and the company that has issued them. These are referred to as “corporate actions”. Examples of corporate actions include takeover offers, mergers, share consolidations, capital reorganisations, dividend distributions, and de-listings.
21.2. Subject to the rights set out in the ISA Terms (if applicable) and section 21.3, you agree that:
21.2.1. Freetrade and its sub-custodians have no duty to inform you of any corporate actions related to the Investments in your Freetrade Account(s);
21.2.2. you waive your right to exercise any corporate actions in relation to your Investments; and
21.2.3. you agree that we or the legal holder of your Investments may exercise (or not exercise) any corporate actions at its discretion. That discretion will not take into account your individual wishes or circumstances, and whether and how those rights are exercised may not result in your preferred outcome.
21.3. In relation to securities issued in the US, we will provide you with the ability to participate in general meetings via a proxy voting service. This will enable you to vote on corporate governance decisions where the issuer of the securities needs to seek shareholder consent. These are called “mandatory corporate actions” and include things like voting at general meetings, board elections, mergers and acquisitions and changes to company bylaws. We will share your personal data with third parties to the extent necessary to provide you with this service, in accordance with our Privacy Policy.
21.4. If you become entitled to any proceeds (such as dividends) or non-monetary benefits (such as additional Investments) as a result of any corporate action in relation to the Investments in your Freetrade Account(s), we’ll take all reasonable steps to collect such proceeds or benefits and credit your Freetrade Account(s) accordingly.
21.5. Any dividends that you become entitled to may be rounded down to the nearest £0.01 when allocated to you.
21.6. We’re under no obligation to initiate or defend any legal action, join any shareholder action or take any other action whatsoever in connection with our (or our nominee’s or sub-custodian’s) position as shareholder of the Investments in your Freetrade Account(s).