(Alliance News) - THG PLC on Monday said it has inked a financial and trading partnership with SB Management Ltd, a subsidiary of SoftBank Group Corp, under which both parties will explore potential commercial arrangements between each other.
The collaboration comprises a USD730 million subscription by SBM in THG shares as well as an option to subscribe for a 20% interest in THG Ingenuity, which is worth USD1.6 billion, implying an enterprise value of USD6.3 billion.
THG Ingenuity comprises the Hut group owner's Ingenuity platform IP as well as its operating trade and assets.
In addition, THG has agreed to acquire New Jersey-based skincare and haircare products Bentley Technologies LLC from its founder and the Riverside Co for USD255 million on a cash and debt-free basis.
The acquisition is conditional on US regulatory approval, and is expected to allow THG to accelerate the programme of new product development, as well as enhance the services provided to partner brands.
For THG's 2021 financial year, Bentley is expected to contribute sales of USD35 million and adjusted earnings before interest, tax, depreciation and amortisation of USD7 million.
To fund the acquisition, and for other purposes, THG is looking to raise USD1 billion comprising USD730 million from SBM subscribing for 86.6 million shares at 596 pence each, and a placing to raise USD270 million through the issue of 32.0 million shares at the same price per share.
Barclays Bank PLC, Citigroup Global Markets Ltd, Goldman Sachs International and Jefferies International Ltd will act as joint global coordinators and bookrunners.
Proceeds will go towards financing the Bentley acquisition, and to replenish and refinance the resources the company has used in several strategic acquisitions agreed in the past six months.
Looking ahead, THG is already in advanced discussions for the acquisition of another beauty brand.
"We are delighted to announce this financial and trading partnership opportunity with SoftBank, one of the world's leading technology investors, recognising both the capability and inherent value of our proprietary technology platform, Ingenuity. The trading partnership opportunity is particularly exciting, providing Ingenuity with an unparalleled global growth opportunity," said Chair & CEO Matthew Moulding.
"The capital raise will provide meaningful capital to accelerate our strategic growth ambitions across our whole business. The acquisition of Bentley materially increases our capability in beauty manufacturing and product development, and strengthens our position as the leading digital beauty business globally," Moulding added.
Shares in THG closed 4.6% lower at 596.00 pence on Monday in London, while Softbank's shares were ended 1.7% higher at JPY10,170 in Tokyo.
By Dayo Laniyan; dayolaniyan@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
Thg (THG)